Ex-Poker Chip Exec John Kendall Convicted of Tax Fraud and Evasion

John Kendall, the former owner of poker chip company Chipco International, has been convicted of eight charges related to tax evasion. He’s also, apparently, very good at evading having his picture taken: we couldn’t even find a mug shot. (Image: ChipCo logo)

A now-defunct poker chip company’s former executive, John Kendall, has been found guilty by a jury in Maine, following a six-day trial on numerous charges related to tax evasion that occurred from late 2007 through 2012.

The 66-year-old was the former president and owner of Chipco International, a Yarmouth, Maine operation that has since gone out of business. The manufacturer previously provided gaming chips to casinos all over the world.

Maine Attorney General Janet Mills said in a press release Kendall was convicted on eight counts, including theft by misapplication of withholding taxes, conspiracy to commit withholding tax evasion, and making false statements on his income tax return. He faces up to 10 years in prison and must repay the hundreds of thousands of dollars he allegedly swindled.

Lusardi Scandal

After nearly 30 years in business, Chipco International spun off into a new corporation in 2013 called Game On Chip (GOC). The company took over Chipco’s assets and manufacturing facility, and regained its position in the market, following its subsequent chip replacement after the Christian Lusardi’s chip scandal at the Borgata Winter Poker Open in January of 2014.

The $560 no-limit hold’em event was abruptly canceled after it was revealed Lusardi was playing with counterfeit poker chips. He was busted when he attempted to flush the chips down his Harrah’s hotel room toilet, ultimately clogging the pipes.

In its response to the Lusardi crime, the Borgata reached out to GOC.

The casino ended up purchasing a large order of the company’s high-tech tournament chips with added security features, such as hidden watermarks that can be quickly authenticated under ultraviolet light.

“This was very expensive, but very necessary,” Joe Lupo, Borgata’s senior VP of operations said at the time. “In order to have the biggest tournaments in Atlantic City and as the market leader, we need to ensure the integrity of the games.”

What Was Kendall Thinking?

While it’s unclear whether Chipco’s re-launch as Game On Chip was in any way directly related to Kendall’s actions, the move certainly raised suspicions.

On August 14, 2013, Chipco posted to its Facebook account, “CHIPCO International is closed! With a great deal of effort the employees started a new company named Game On Chip Company. We brought with us the years of experience that every other manufacturer of ceramic gaming chips can only minimally copy.”

Kendall’s disassociation with Game On Chip was vital to the new company’s potential success. Poker chip manufacturing is a business that is closely monitored by government regulators and scrutinized by casino operators.

During an interview last July, GOC owner Bill Clifford said of regulators, “They want to know more about me than my family knows about me. They will go back through every financial transaction that I’ve made in my adult life.”

While Clifford and GOC are by all means playing by the rules, Kendall’s failure to do so is rather shocking considering the industry’s strict regulatory environment. Of the $165,000 in taxes Kendall failed to pay, $110,000 has since been recovered by the Maine Revenue Service.

After Kendall’s sentencing, which will take place in the next 30 to 45 days, he’ll be on the hook for the outstanding balance.

Editor’s Note: We received the following comments from Game On Chip Company CEO Bill Clifford on March 23, 2015, and publish it here as an addendum to our story:

There have been many articles written since Mr. Kendall’s conviction and this article is one of the most informative and accurate I have read. I am the CEO and President of Game On Chip Company and therefore feel compelled to make a couple of clarifications. Chipco was a tenant in my facility for several years prior to the IRS shutting them down, at that time I had nothing to do with their operation. Game On Chip Company is not the result of a spin-off of Chipco. Chipco was forced to shut down and their assets were auctioned of by Comly Auctioneers and sold to an out of state party, not myself or Game On Chip Company. I was able to purchase some assets from this 3rd party but the majority of them are gone. Game On Chip Company purchased and built new machinery. Game On Chip Company started with some old Chipco employees and some new employees, the management team is ALL new. The gaming industry is one that demands honesty, integrity and financial strength and I feel it is important for the relationship between Chipco and Game On Chip Company be described accurately. The Borgata is just one of the high profile casinos that have placed their trust in us and we continue to work with. We are hopeful that Mr. Kendall’s conviction will close this novel and allow us to focus on our client relationships and making a competitively priced product of unmatched quality.

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