Former South Pittsburg Mayor Mike Killian has been charged by federal authorities for illegal gambling. He has agreed to plead guilty to the charge.
He is the brother of U.S. Attorney for the Eastern District of Tennessee Bill Killian. The indictments and complaints are usually signed by Bill Killian, but this one was signed by Jack Smith, chief of the Public Integrity Department of the U.S. Department of Justice. Trial attorneys are listed as Mark Angehr and Barak Cohen, who are not associated with the Bill Killian office.
Mike Killian faces up to five years in federal prison and a fine up to $250,000 or twice the amount of the pecuniary gain.
The complaint says from 2004 to January 2013, Mike Killian managed an illegal gambling operation with revenues of as much as $2,000 per day. Some of the gambling started as early as 1988.
The operation included video gambling, sports betting and an "outlaw" lottery - all of which violate state law, it was stated.
The complaint says the "outlaw" lottery involved placing illegal bets on legal state lotteries.
A raid was conducted on the Killian operation on Jan. 15.
Authorities said Killian ran the sports betting operation through an individual identified only as Person A."
The complaint says two video gambling machines containing $2,786 were found at the Lotto Mart, 519 E. 12th St., South Pittsburg, and $3,000 was found in a safe.
It says $11,609 in cash was seized from Mike Killian Wholesale Fireworks, 1505 S. Cedar Ave., South Pittsburg. It says $21,080 was seized from a safe. Two laptop computers and two desktop computers were confiscated.
As a part of the plea deal, Killian agreed to the forfeiture of all the money and property.
In the plea agreement, Killian said he knew that the gambling operations were illegal.
From about 2007 to January 2013, the gambling machines at the Lotto Mart were located in a separate room with a door marked "Private". Income was between a few hundred to several thousand dollars a week.
The agreement says the illegal betting operation started in 2002 with Person A running it and dividing the proceeds evenly with Killian. In case Person A did not have enough cash to pay off winning bettors, Killian supplied the money. Person A either personally paid off the winners or left envelopes filled with cash at the Lotto Mart.
From 2002 until the recession in 2008, the sports betting operation yielded about $45,000 per year that was split between Killian and Person A.
In October 2012, Killian set up an account with OutlawLine.com - a sports betting site owned out of Costa Rica - and Person A received sports bet through the account until January.
The outlaw lottery began in 1988 and yielded $50 to $60 per day. It involved bets placed on lotteries in Tennessee, Georgia and illinois.
Mike Killian was mayor of South Pittsburg until 2004 until 2012.
He considered running for state Senate in 2007 when the seat was vacated by Ward Cruchfield, but decided against it.
Killian is represented by Chattanooga attorneys Lee Davis and Bryan Hoss.