Stephen Mardigan’s life as the leader of a high-stakes sports betting operation in Portland began by accident.

The used car dealer had collected bets from friends and planned to pass them on to his bookmaker. But Mardigan didn’t get them in on time, so he ended up holding the risk. His friends all lost, and Mardigan got to keep the winnings. He went from bettor to bookie, and so began an underground career that would decades later lead to a federal conviction and a 15-month prison sentence.

“I did not set out to break the law, but somehow I crossed that line along the way,” Mardigan wrote in a letter to the judge on his case. “I would like you to know my story.”

The case opened a window into the world of sports betting just as the state Legislature will consider bills this year to legalize, regulate and tax the practice in some form. Seven states and the District of Columbia have already done so since the U.S. Supreme Court last year overturned a 1992 federal law that prohibited states from legalizing gambling on sports.

Mardigan, 62, pleaded guilty in May to unlawful gambling, money laundering and filing a false tax return. He also agreed to forfeit nearly $700,000 and 19 properties valued at $13 million, in addition to paying more than $3 million in back taxes and penalties. He was taken into custody Tuesday evening, just hours after his sentencing in U.S. District Court in Portland.

The judge sentenced him to 15 months in prison despite an argument by Mardigan’s legal team that many forms of gambling are common nationally and in Maine.

“It’s not going to change anything,” defense attorney Bruce Merrill said in an interview later. “It’s not going to change that people are going to bet on the Patriots this weekend.”

‘THAT’S WHEN THE CHASE STARTED’

Criminal convictions for gambling are rare in Maine, although there are limited data available. Federal and state laws generally target people who run illegal gambling operations, rather than people who place bets. As in Mardigan’s case, charges for unlawful gambling can also be coupled with those for other financial crimes.

Mardigan and his associate William Flynn were the only people charged with illegal gambling in U.S. District Court in Maine in the last 10 years, a search of electronic federal court records shows. Mardigan’s attorneys submitted sentencing data from hundreds of similar cases nationally dating back to 2002, however.

Federal authorities have said Mardigan ran the largest illegal gambling operation in Maine, although his lawyers disputed that claim.

The defense team described Mardigan in court filings as industrious at a young age. He started working in his father’s store when he was 8 years old. He graduated from Cape Elizabeth High School in 1974 and soon started an auto detailing business. That work led him to open a used car dealership called Avenue Auto.

In his letter to the judge, Mardigan said he placed his first bet while in his 30s watching a football game with a friend. The friend knew a bookie, a person also known as a bookmaker who takes bets, collecting when he wins and paying out when he loses.

“I lost and that’s when the chase started,” he wrote in his letter.

What followed has now been diagnosed as a gambling addiction, according to court records. Mardigan bet on any and every sport. He described spending his Saturday mornings watching sports shows, studying stats and listening to professional gamblers give their picks for the week before calling his bookie. When he accidentally held a bet for his friends for the first time, he realized he preferred that role.

“I thought to myself, this is so much better,” Mardigan wrote. “I don’t have to spend the time researching and picking the games I want to bet. I let them pick. I had money in the bank to back me up when they won and the excitement was over the top.”

‘I WAS OUT OF CONTROL’

Mardigan’s life was constant action. He attended car auctions. He was a day trader in stocks, once making $300,000 in one day just to lose it the next. He used gambling winnings to buy real estate, from commercial buildings in Portland to waterfront homes in Cape Elizabeth.

“I now realize that I was out of control,” he wrote. “See, gamblers get a high that’s stimulating but tranquilizing at the same time. I lived for that. It was a gambling roller coaster. During the day I had business dealings, at night I had my gambling.”

Merrill said many of Mardigan’s bettors – none of whom have been charged with a crime – were people he met in the auto business. Mardigan’s lawyers named his two biggest bettors for the first time in a recent court filing – Gerald Day, who owns Sanford Auto Sales, and Stephen Goodrich, who is one of the owners of Yankee Ford in South Portland. Day declined to comment through his attorney, and Goodrich did not respond to attempts to reach him through the dealership and his payment processing business.

“Everything that Steve has been involved in provides him with that kind of action,” Merrill said.

HOW THE OPERATION WORKED

Court documents, including information from wiretaps and unnamed sources, provide some details about how Mardigan ran his operation.

Gamblers called Mardigan at a day number and a night number. Over the phone, he would provide updated lines – the predicted margins of victory or point spreads that he tracked on the internet. And he took bets on who would win or lose, or who would beat the spread or fail to beat the spread. He accepted wagers on all types of sporting events, from football to car racing to golf.

In sports betting, the bookie typically earns a 10 percent commission on each bet called a vigorish, or a vig. In theory, bookmaking involves balancing bets on either side of a line, so that the bookie never loses money no matter the outcome.

People who lost bets could pay by dropping the money in a slot at Avenue Auto, mailing a check or meeting Mardigan in person. A loss on a Sunday game was due on Tuesday. Those who won went to Avenue Auto to collect a check or cash.

One of the most prolific bettors was not named in the government’s filings but was described as the owner of another car dealership. He wagered $5,000 or $10,000 at a time, and when he lost, he wrote checks to Avenue Auto from his own business account. Prosecutors said he paid Mardigan more than $2.7 million in losses from 2009 to 2015 and collected $700,000 in winnings in that same period. He told investigators he would sometimes sit out a football season “because it was depressing to be out of money,” according to court documents.

At the sentencing hearing, Merrill described the gamblers who placed bets with Mardigan as business people who could afford to lose.

In conversations overheard on the wiretap, multiple gamblers discussed their debts of several thousand dollars with Mardigan and in some cases made arrangements to pay them.

Mardigan was not charged with violent crimes, and there is no evidence he or his associates physically harmed anyone during the years he took bets and collected on debts.

Only one person cited in the prosecution documents said an associate of Mardigan’s threatened him over a debt. Another said Mardigan paid him $8,000 for helping to negotiate down and collect a debt from another person.

Mardigan was only convicted of illegal gambling dating back to 2003, but investigators estimated that Mardigan took in between $9 million and $12 million in net gambling proceeds over 20 to 25 years. The defense team has argued the government greatly exaggerated that number, saying it is calculated based on the two largest bettors who were not indicative of the rest of Mardigan’s operation.

GOING TO GAMBLERS ANONYMOUS

During a wiretap investigation in March 2017, the FBI overheard Mardigan accept more than $190,000 in wagers from 17 people, mostly on the NCAA men’s basketball tournament.

In April 2017, federal agents seized nearly $850,000 in cash and watches from Mardigan and three others during a sweeping raid in Portland. They also discovered records related to 10 other bettors, but one source interviewed by investigators estimated Mardigan worked with as many as 60 or 70 people.

In Mardigan’s case, prosecutors alleged that at least five people were involved in operating the gambling ring beyond being bettors. But only one other person faced criminal charges.

Flynn, who is also from Portland, pleaded guilty last year to one count of unlawful gambling and was sentenced in October to two years probation. He also agreed to forfeit $75,000. The judge imposed that penalty in part because of Flynn’s age and poor health; he was 77 at the time of sentencing. Prosecutors said Flynn coordinated bets with Mardigan, shared profits and losses with him, and communicated regularly with him about sports lines, bets taken and other aspects of the business. Mardigan also served as the “bank” for Flynn’s bets.

The U.S. Attorney’s Office declined to comment for this story.

At Mardigan’s own sentencing last week, Chief Judge Jon Levy listened to the testimony from a forensic psychologist who talked about his interviews with Mardigan and his diagnosis of a gambling addiction. He also heard from Mardigan’s sister, Leslie Poulin, who said her brother has attended Gamblers Anonymous meetings “religiously” since May 2017. Mardigan, who also attends therapy, himself wiped tears from his eyes as he delivered a short and apologetic statement. In his letter, he described what he sees as a lack of resources for people with gambling addiction.

“We have no professionals to help, we just talk about our problems,” he said of his Gamblers Anonymous meetings. “Sometimes there are only two in attendance, other weeks five or six, it’s usually the same people. If a regular doesn’t attend for awhile we assume they have relapsed.”

NOT ‘THE ONLY GAME IN TOWN’

When the judge announced his sentence, Mardigan’s family members in the courtroom gasped. As he explained his decision, Levy highlighted the other charges in Mardigan’s case and rejected the idea that illegal betting is a victimless crime.

“Whether lawful gambling is a good or bad thing is not a policy question for a judge to decide,” Levy said. “That’s for others to decide, but unlawful gambling is another matter entirely. It’s done in secret. It begets money laundering, as was the case here. It begets tax evasion, as was the case here. And it can ruin lives, as it has clearly done to Mr. Flynn and Mr. Mardigan.”

Merrill said he believes people will still gamble under the table even if Maine legalizes sports betting. Unlike most bookies, the state will likely require money to be paid up front for a bet, he said.

“There’s several bars you can go to in Portland and place bets,” Merrill said, though he declined to name them. “You have to know where to go. It’s not like Steve Mardigan was the only game in town.”

Megan Gray can be contacted at 791-6327 or at:

mgray@pressherald.com

Twitter: mainemegan