Wichita businessman Johnny Steven gets probation, agrees to forfeit thousands in gambling case

A federal magistrate judge on Wednesday ordered Wichita businessman Johnny Steven to serve one year of supervised probation stemming from a multi-year FBI probe into illegal gambling in the city.

Steven pleaded guilty to a single count of accessory after the fact to the unlawful transmission of wagering information.

The conviction is the latest among a group of men prosecuted for their involvement in private poker games around Wichita — or lying about them to federal investigators. The convicted include law enforcement officers and prominent members of the business community including Steven’s brother, Brandon Steven, who owns health clubs, auto dealerships and other ventures in town.

Johnny Steven also agreed to forfeit $97,600 in his gambling earnings. That money has already been paid to the U.S. Marshals Office, Wichita defense attorney Kurt Kerns said Wednesday during Steven’s change of plea and sentencing hearing.

Brandon Steven forfeited more than 10 times that amount — $1,095,000 — to help resolve his case in June.

On Wednesday morning Johnny Steven sat in a downtown Wichita federal courtroom next to his attorney and admitted that he “acted in cooperation” with a Wichita bookie convicted of organizing the poker games, Daven “Smoke” Flax, through October of 2016 and then concealed their involvement by not turning over handwritten ledgers that detailed the games’ financial information and obligations.

A witness testifying in a connected case last year said that Johnny Steven owned the gambling operation with Flax.

Steven, a 41-year-old insurance business owner, said little as Magistrate Judge Gwynne Birzer read through his rights, accepted his guilty plea and pronounced his sentence. The case was made public earlier this week, but it’s likely Steven and his attorney negotiated with prosecutors for some time prior to Wednesday’s hearing.

Asked by the judge whether he wanted to make a statement on his own behalf during the hearing, Steven responded with: “Thank you, your honor. I’m good.”

“This is a cloud that has kind of hung over his head” since authorities served search warrants a few years ago connected to the gambling investigation, Kerns said in court. He said Steven now plans to focus on his wife and children, business ventures and “getting a good night’s sleep.”

“He is remorseful for the gambling and wants to put this case behind him.”

Birzer said the sentence followed the plea agreement Steven and attorney negotiated with U.S. Attorney Stephen McAllister’s Office and that she felt it would be an “adequate deterrence” from future criminal conduct while protecting the public from further crimes.

Steven’s probation is supervised, meaning he must check in periodically with a federal probation officer. He’ll have standard probation rules to follow — including staying away from illicit drugs and avoiding any new criminal activity.

But he’ll also be required to turn over business and personal financial records to the U.S. Probation Office on request to ensure he is only involved in “legal financial activity going forward,” Birzer said.

The maximum sentence Steven could have received is up to a year in prison, up to a year of supervised release, a $125,000 fine and a $25 special assessment to a crime victim’s fund, according to court records.

He has to pay the special assessment but no additional fine.

Federal prosecutors alleged in charging documents filed Monday that Steven knew Flax was committing gambling crimes, yet “did knowingly and willfully receive, relieve, comfort and assist ... (Flax) in order to hinder or prevent” his “apprehension, trial or punishment.”

In a 2018 ruling, U.S. District Judge Eric Melgren said Johnny Steven and Flax were the ”primary targets” of an FBI investigation into illegal poker games. Steven was implicated in the illegal gambling ring by a witness testifying during ex-Kansas state trooper Michael Frederiksen’s jury trial last year who said the men allegedly owned the gambling operation together.

Steven was Frederiksen’s insurance agent and invited him to the poker games, according to statements made during Frederiksen’s trial.

In an email to The Eagle on Tuesday night after news of Steven’s federal charge broke, Kerns characterized it as “a misdemeanor for not ratting out a friend’s private poker game.”

“I doubt if the general public really cares if a group of friends want to play poker at a home, when the state of Kansas itself encourages the exact same activity eight miles south,” he wrote in the email.

At least some of the gambling happened at business space rented out for the poker games.

Other men charged in connection with the gambling probe are:

▪ Danny Chapman, 69, a bookie, who pleaded guilty to operating an illegal gambling business and tax evasion on Jan. 12, 2018. He was sentenced April 25 to two years of probation and agreed to forfeit more than $1.6 million in the case along with cars, jewelry and other items.

▪ Daven Flax, 48, who pleaded guilty to two counts of illegal gambling and one count of making a false tax statement after failing to pay federal income taxes on about $346,000 in winnings. He ran illegal poker games throughout Wichita and paid dealers, waitresses and caterers and rented the businesses where the games were held. He also worked as a bookie for Chapman’s sports betting operation. He was sentenced to two years of probation and agreed to pay $117,000 in restitution.

▪ Michael Zajkowski, 51, a former Wichita police officer, who pleaded guilty to one count of misprision of a felony for looking the other way for years while he knew about the illegal gambling ring. He was accused of using police resources to look up a license tag and identify an undercover officer who was investigating the games. He was sentenced to time served and a $100 assessment but wasn’t ordered to pay a fine or serve any probation or prison time.

▪ Bruce Mackey, 47, of Goddard, a former Wichita police officer, who pleaded guilty to misprision of a felony for failing to report the illegal poker games. He was accused of using police resources to identify an undercover officer who was investigating the games. He was originally charged with obstructing a criminal investigation. He was sentenced in October to a year of probation.

▪ Brock Wedman, 50, of St. Mary’s, who was accused of running an illegal gambling business. He pleaded guilty to misprision of a felony in April. He was accused of asking Zajkowski and Mackey to determine if an undercover officer had attended a Feb. 12, 2014, poker game. He also admitted to helping organize and recruit players. He was originally charged with obstruction of justice and lying to the FBI. Like Zajkowski, he was sentenced to time served and a $100 assessment.

▪ Michael Frederiksen, 54, of Derby, a former Highway Patrol trooper, who was convicted by a jury in May 2018 of making false statements to FBI agents during the investigation into illegal gambling in Wichita. Frederiksen was sentenced in January to one year of federal probation but a judge vacated his conviction last month on the grounds that his attorney was ineffective. A new trial date had been set for mid-December, but the federal prosecutor’s office dismissed Frederiksen’s charges.

▪ Jack Oxler, 43, a former high school and college tennis coach, who was sentenced to probation for his role in illegal gambling in Wichita. Oxler had to forfeit $40,000 he made while operating and managing illegal poker games and a sports betting business from February 2014 to February 2017. He pleaded guilty to two counts of illegal gambling in February 2018 shortly after he was charged.

▪ Daniel Dreese, 66, who was sentenced to two years of probation on two counts of making false statements on income tax returns. He admitted to making hundreds of thousands of dollars from illegal bookmaking including receiving $89,078 in 2011 and $136,985 in 2012. He also didn’t report $383,684 in income in 2010. He was ordered to pay $214,540 in restitution.

▪ Brandon Steven, 45, a Wichita business and brother to Johnny Steven who pleaded guilty in June to one count of accessory after the fact to the unlawful transmission of wagering information. He admitted to hiding gambling ledgers connected to the illegal poker games. He was sentenced to three years on probation and forfeited more than $1 million of money he’d made off the games.

Contributing: Dion Lefler and Chance Swaim of The Eagle

This story was originally published November 19, 2019 at 7:52 PM.