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The Card Con

Fifteen novice gamblers trusted $2.25 million to their gambling "coach." But the coach's plan was a scam that would collapse
Michael Kaplan
From the Print Edition:
Arnold Schwarzenegger, July/Aug 03

Like all good confidence scams, this one was built on a foundation of greed and gullibility. It promised quick money with limited labor. The stakes were high, but the impending reward was tremendous: $1 million in 90 days. It was presented in black and white, with numbers that appeared mathematically sound. Adding an extra element of allure, the million dollars would be coming out of Las Vegas casinos. But what made this scam truly amazing was something that Carl Ponzi would have killed for: under optimal conditions, in a perfectly honest world, the money-making scheme being dangled really would have worked.

Its clear-cut viability short-circuited all the cynicism and caution from the brain of Tom Hastings (names and some details have been changed), a 45-year-old CPA from Los Angeles, as he read a newspaper ad asking for blackjack players who wanted to win big. A long-term mediocre casino habituÈ who had mastered basic strategy and owned every card-counting guide that the Gambler's Book Club sold, Hastings loved the game and was dying to beat it through what he perceived to be his intellectual superiority. He called an 800 number listed in the ad, spoke with a man on the other end of the line, and arranged to meet with him in a posh hotel suite near The Sunset Strip.

Well into his 60s, tall and skinny, wearing an obvious toupee, Richard Chapman didn't appear to be the kind of person who could make anyone rich. But Hastings was impressed by the digs. He noticed three blackjack tables situated around the living room and a half-dozen bank bags fanned out on an end table. Resembling oversized pencil cases, they appeared to have gotten plenty of use. "Each one can comfortably hold a brick of money," Chapman said in a casual, offhanded way. "You know what a brick is, don't you?"

Hastings shook his head. "It's a pack of 500 $100 bills -- $50,000. Play blackjack with me and you will get used to carrying two of these into every casino you enter."

Over the course of a three-hour conversation, Chapman patiently answered Hastings' questions and explained how the money-making operation works. Fifteen people each kick in $150,000, resulting in a combined bankroll of $2.25 million. With that money, they play blackjack, the Chapman way, and increase their investments by seven times within a 90-day period -- after Chapman has taken 40 percent of the winnings as his own payment. In exchange, Chapman promises to teach team members how to count cards (a winning system in which you keep track of the blackjack deck's progress, betting high when the deck is rich in aces and picture cards, and low when it isn't), manage the team in Vegas (keep the players rotating in and out of different casinos), and provide them with schemes to keep the card-counting invisible. That last element is an important one, since casinos ban card counters.

To sweeten the pot, Chapman showed Hastings a photo album. It was filled with shots of previous teams in action, displaying gamblers in ornate Vegas suites (comped by casinos, under the assumption that the players are high-rolling suckers), posing alongside pyramids of banded hundreds. In one shot, a burly fellow was kneeling down and kissing the money. A magnum of Moët & Chandon could be seen in the background. Hastings asked for references, somebody from a past team with whom he could speak. "Not possible," replied Chapman. "All my players sign confidentiality agreements and I give them the same courtesy."

Hastings left Chapman's hotel with an as yet unsigned contract that laid out the rules of team play and the ways in which money would need to be invested and paid out. Hastings felt that $150,000 was too much for him to risk -- but he could not shake the notion that this seemed like a once-in-a-lifetime opportunity, something that no beaten blackjack player could turn away from. Making the decision trickier, he couldn't say that he completely trusted Chapman, but everything that Chapman told him about card counting -- including the $500 to $5,000 bets that would be spread to accommodate shifts in the deck and the advantages of minimizing volatility through team play -- rang true.

Slowly, over the course of a few weeks, encouraged by sporadic calls of encouragement from Chapman, Hastings convinced himself that the investment was sound. He dipped into various mutual funds, scraped together the payments, and signed on. He spent long weekends with Chapman, learning to card-count, and surprised himself by the high level of proficiency he was able to rapidly achieve. One afternoon, Chapman put Hastings to the test: he dealt 10 shoes of cards and Hastings was required to make fewer than 0.7 mistakes per shoe. He passed with flying colors.

At the same time, Hastings played the important role of recruiter. Because of his professional status as a CPA, Hastings was able to convince other professionals to sign on. Attorneys, corporate executives and even one casino vice president bought into the dream. They put up their 150K and worshiped at the temple of Chapman, spending long nights learning the card-counting system and gossiping with one another on the weekends. "We used to talk about Chapman all the time," Hastings remembers. "We were always discussing whether or not he was for real, whether he should be trusted, but it always came back to the same thing: there were more of us than there were of him. If he tried to pull something we didn't like, we would be able to overrule or overpower him."

As weeks passed, with Chapman now holding 10 percent of each player's investment, team members had mounting reasons to be concerned. Because he couldn't find enough people to put in $150,000 each, Chapman bulked up the team with smaller investors, people who paid chunks of the $150,000 entry fee. They wouldn't all be able to play in the casinos, but they would function as "observers," the idea being that they'd watch the players and serve as insurance that no thievery went on. "I didn't like the idea of all these guys coming in for less than 150," says Hastings. "I felt that they would have the incentive to steal from us. But it's what Chapman wanted to do, and we were all willing to listen to Chapman. He was, after all, the expert."


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