The 1970s: SP

The remarkable change in the character of organized crime from the crude tactics of the 1950s to the syndicated operations of the 1970s is aptly illustrated in the reported rise of George David Freeman as Sydney’s largest SP bookmaker.

SP bookmaking has come under increasing organized crime control during the 1970s and, as Mr Justice Moffitt warned, there was evidence as well to indicate that the new SP syndicates were in contact with major international heroin smugglers and domestic drug distributors. The SP bookmaking business of the 1970s had become subjected to syndicate control and was serving as merchant banker to organized crime.

For almost a decade following the police anti-betting campaign of 1965-6 there was little pressure applied on the SP phone networks and even less publicity about their operations. Symptomatic of the general ignorance about the state of the SP industry, the recently-elected Premier Neville Wran told the State parliament in 1976 that his government would make an effort ‘to stamp out the remaining vestiges of SP betting in New South Wales’.

Abandoning the traditional operations, SP operators expanded their telephone networks and developed a more sophisticated style of operation. The few accurate media reports that appeared during this decade emphasized the size and sophistication of the ‘new’ SP operations. A Daily Mirror sporting columnist reported in 1970 that ‘SP betting, per telephone, is as busy in New South Wales today as at any time in the past twenty-five years’. Two years later, eighteen TAB managers complained of widespread SP betting and charged police passivity as the major factor behind the industry’s strength.

The first significant revelations about the nature of the new SP business emerged from the N.S.W. parliamentary debates of 1978-9. As the struggle for control of Sydney’s flourishing SP business intensified, rival syndicates turned to their police and political allies in an effort to crush their opponents. Prompted by the quiet war among the SP men, incriminating documents emerged from the recesses of police headquarters and the N.S.W. Parliament suddenly discovered that the SP business was not dead. The debate began in early 1978 with a series of questions to Premier Wran by the leader of the opposition Country Party, Mr Punch, who asked if a senior government official had issued an order restraining police from raiding SP operations. Mr Punch asked further if ‘that order had the effect of particularly protecting the extensive operations of the organized crime figure, David George Freeman’. Mr Wran promised to investigate the allegation and said: ‘As to David George Freeman that is a name not known to me’. Some six months later, on 6 September, Opposition front bencher John Dowd again raised the issue stating ‘that a report had been completed by the criminal intelligence unit of the police force dealing with the association of one George David Freeman with other persons. Included in the list with whom he was associated was the chief stipendiary magistrate, Mr Murray Farquhar.’

When Parliament reconvened in March and April 1979 Opposition spokesmen revived the issue and sparked one of the major political controversies of the Wran administration. John Dowd combined with several parliamentarians including the Independent John Hatton to offer a positively threatening portrait of George David Freeman, the man they alleged to be in control of SP betting in the State. Paraphrasing a confidential N.S.W. police report, Mr Hatton described Freeman as ‘one of the leading criminal figures in this State’, a close associate of Stanley John Smith ‘who is said to have replaced the so-called “Mr Big”, Leonard Arthur McPherson’. Hatton further charged that Freeman was ‘the principal figure in what might be called the Taiping conspiracy’, an effort by underworld leaders ‘to bribe members of this Parliament to try to secure control of casino licences for criminal interests’. Continuing what must rank as the longest parliamentary discussion of any criminal career since the Victoria Parliament debated John Wren’s illegal betting empire in 1906, Mr Hatton went on to describe Freeman as ‘the Australian contact man for one Danny Stein, an associate of notorious American organized crime figures, including Meyer Lansky’.

Premier Wran tried to still the partisan controversy with a pinch of perspective. Seeking to dismiss the debate, he observed, in the tradition of his Labor Party antecedents, that it was ‘well-nigh impossible’ to suppress SP betting because of general public tolerance. Moving from philosophy to mythology, Mr Wran said: ‘I am told that in every country town there is always a person who is the SP bookie; an “Old Fred” who is everyone’s friend. If one is broke he lends one a few bob. He is someone who is held in fairly high regard.’

Obviously, Mr Wran’s ‘Old Fred’ is light years away from Mr Dowd’s and Mr Hatton’s ‘Freeman’. These conflicting images represent substantial differences of opinion over the nature of the SP bookmaking and organized crime. In years past, ‘Old Fred’ may have been characteristic of the estimated 6,000 illegal bookmakers working in New South Wales. During the 1970s, however, organized crime is believed to have expropriated the greater share of illegal bookmaking in Sydney. ‘Old Fred’ is increasingly just a pencilman or runner for a conglomerate criminal operation with interstate and international connections.

George David Freeman’s career in crime and alleged SP organization are illustrative of new patterns in the illegal bookmaking industry. Born in the Sydney suburb of Annandale in January 1934, Freeman incurred the first of some forty charges he was to accumulate by the age of forty-three when he was arrested in 1947 for stealing money and was sentenced to six months’ probation. Over the next thirty years he was convicted for such offences as ‘break, enter and steal’ a car radio (1951); ‘possession of house breaking implements’ (1955); ‘stealing stockings from store’ (1962); ‘steal cardigan from retail store’ (1963); and ‘steal and receive’ in Perth (1968).

Supplementing this sparse catalogue of arrests, N.S.W. police have gathered information on Freeman which depicts him as a man of talent who has risen from meagre circumstances in Sydney’s working-class inner Western Suburbs to a position of wealth and influence. Judging from his testimony before the Moffitt Royal Commission in 1973 and police reports on his activities, there have been three main elements in his rise: his close alliances with leading Sydney personalities like Leonard McPherson and Stanley John Smith; his association with alleged American organized crime figures; and his alleged involvement in SP betting activities.

Known to the police in the 1950s as ‘a hoodlum type and not very fond of work’, George Freeman worked as a labourer in the State Abattoirs, and resided in a flat at the Herne Bay Housing Settlement. During the 1960s, however, his fortunes began to improve markedly. Apparently specializing in shoplifting for which he was arrested seven times between 1961 and 1968, Freeman travelled to London in 1967 where his involvement in an ‘organized campaign of shop lifting’ with fellow Australian Arthur ‘Duke’ Delaney attracted the attention of New Scotland Yard. Arriving at Perth in 1968, he was arrested for shop stealing with his long time mate Stanley John Smith.

Freeman’s American associations have been the subject of continuing controversy. In his own extensive testimony before the Moffitt Royal Commission, Freeman admitted that he had travelled to Chicago in 1968 under an illegally obtained passport with Stanley Smith, and for six weeks stayed at the luxurious residence of Joseph Testa. Recriprocating the hospitality, Freeman served as Testa’s host in 1969 and 1971 when he visited Sydney, introducing him to Leonard McPherson.

For two decades Freeman has maintained close associations with Leonard McPherson and Stanley John Smith. Testifying before the Moffitt Royal Commission in 1973, he described himself as a ‘friend’ and ‘associate’ of the two, and police then described Freeman as ‘McPherson’s second-in-command’. Commonwealth police have testified that Freeman was one of several men who attended the famous Double Bay meetings in October 1972, ‘alleged to be called to discuss the current activities re organized crime’.

A March 1977 N.S.W. police intelligence report provided further evidence of Freeman’s close associations with Stanley Smith.Arrested near Melbourne’s Tullamarine Airport in possession of cannabis, Smith ‘was charged at Bondi Police Station on a charge of possessing Indian hemp. Freeman went to the police station and inquired about the bail. In July 1976 [Freeman’s office employee Lynette] Black travelled to Melbourne for the court appearance of Smith. The court allowed Smith $20,000 bail which was lodged in cash by Black.’

Describing himself as a racing ‘commission agent’ in his 1973 appearance before the Moffitt Commission, Freeman began to acquire the signs of affluence. In 1973 he bought a house at Blake-hurst for $170,000; in 1977 he shifted to a new residence at Sylvania Waters worth $200,000, and in mid-1978 he bought a palatial mansion at Yowie Bay for $350,000 cash from gambler Bruce Galea. A police search of his home in 1976 turned up $37,901 cash in a briefcase in the boot of a late model Mercedes sedan which he had purchased three weeks earlier for $31,000 cash. Subsequent invesi-gations uncovered bank accounts with credit balances of $61,385 making a total of $130,286 in visible cash-convertible or cash assets.

A N.S.W. police intelligence report of March 1977, tabled in State parliament two years later, indicates that Freeman was believed to be heavily involved in illegal off-course betting. Detective Inspector R. Stevenson stated that Freeman had been involved in a Brisbane ‘betting coup’ some years earlier. Freeman, he noted, ‘is still a very big better, and many prominent bookmakers are wary of him, mainly because of the amounts he bets, freezing the market and money cannot be laid off’. Police conducted an intensive survey of his operations in early 1977, the summary of which is contained in excerpts of their report released by the N.S.W. Parliament. Directing his operations from a central office with six employees, Freeman allegedly maintained twenty phone betting agencies scattered across central and eastern Sydney, concealed behind real or fictitious commercial facades such as Effective Cleaning Services Pty Ltd. Investigative reporters from the Daily Telegraph learned that Freeman’s abandoned phone office at Rockdale had plugs for ten telephone extensions, indicating that his SP network may have had as many as 200 phones in operation.

The controversy surrounding the 1978-9 parliamentary debates reveals a good deal about George Freeman’s character, associations and personal lifestyle. The sophisticated George Freeman of the 1970s was clearly far removed from the ‘hoodlum type’ who had once tattooed a ‘heart dagger, Maria and Mother’ motif on his right arm and ‘TRUE LOVE’ on the backs of his fingers. Among the most controversial of Freeman’s alleged associates is Mr Murray Farquhar, ex-N.S.W. Chief Stipendiary Magistrate. On 27 July 1977 inspectors at Randwick racecourse spotted Freeman, who was then barred from several racetracks in the State, seated in the members’ enclosure one seat away from Chief Magistrate Farquhar, and ejected him from the enclosure. Following allegations of Freeman’s influence in Parliament in March, 1978, several Sydney newspapers ran stories about the incident, prompting Mr Farquhar to explain that he ‘was asked to supply a ticket for a mutual friend and I didn’t know it was for him’ (Freeman).Reviving these charges before State Parliament in September, Opposition front bencher Mr John Dowd, MLA stated that police had completed a report about George David Freeman’s associations with other persons including the Chief Stipendiary Magistrate, Mr Farquhar.

That same day the chief racecourse inspector Francis M. Lynch testified before the N.S.W. Select Committee on Crime Control that ‘the magistrate made the approach’ for Freeman’s ticket to the members’ enclosure on the ‘pretence’ it was for a ‘friend of his and a lady friend of his wife, from Adelaide’. The inspector reported that the magistrate and Freeman were ‘assembled together for two hours, meeting after each race and before each race and talking together’. Despite the Opposition criticisms, the government found nothing inappropriate in this alleged association between the State’s Chief Magistrate and one of its reputed organized crime figures.

The next round in the controversy came in March 1979 when the Deputy Leader of the Opposition, Bruce McDonald, MLA, asked the Premier whether there was concern that George David Freeman had unusual and undue influence over the 21 Special Division.The following day Freeman appeared on the steps of Parliament House with a TV camera crew, and dispatched a solicitor’s letter to Mr McDonald challenging him to debate his remarks outside Parliament without the protection of privilege. Failing to draw McDonald into debate, Freeman and the television crew hovered about Parliament’s front steps where the reporter began to film an interview with Freeman. Disturbed that Freeman was being interviewed ‘in the precincts of Parliament House’, Legislative Councillor B. J. Unsworth confronted the film crew but was treated in a manner that he later termed ‘a gross breach of privilege’.


That evening Freeman gave an interview to the Willesee show in which he insisted that he had abandoned the SP business. In almost simultaneous interviews with Sydney’s leading tabloid newspapers, Freeman admitted to an annual income of $50,000, described himself as a ‘commission agent and professional punter’, and was reported as owning a palatial waterfront mansion at Yowie Bay in Sydney’s southern suburbs, with a late-model Mercedes parked in the drive.

The final and most dramatic act in this unfolding political melodrama occured at 9.30 p.m. on 25 April. A gunman whom Freeman was later unable to identify called at his Yowie Bay home and shot him with a light calibre weapon, possibly a .22, hitting him on the left side of the neck. Miraculously, the bullet passed through his mouth and exited just below the right temple without doing serious damage. Although police told the Sun newspaper that the light calibre indicated an ‘amateur’ gunman, Bob Bottom, a former N.S.W. State Adviser on Organized Crime, reported that the .22 calibre pistol was already the weapon of choice among hired killers in the United States and Australia, and noted it was the same weapon used to kill anti-drug campaigner Donald Mackay. The distortion of shape suffered by a light bullet makes it difficult to determine the weapon of origin by ballistics tests.

More important than his ability to mobilize camera crews, solicitors, magistrates and newspapers has been Freeman’s alleged relations with American organized crime figures. In the course of the 1978-9 parliamentary debates on Freeman’s career, Opposition members referred repeatedly to a N.S.W. Police Crime Intelligence Unit (CIU) report dated March 1977 which detailed certain aspects of his continuing relations with suspect Americans. One of the first Australian personalities to develop a long-term relation with an American reputed to be an organized crime figure, Freeman maintained his contact with Joseph Testa into the early 1970s.

As his relationship with Testa faded in 1973-4, Freeman began to associate with another alleged American organized crime figure — Danny Stein. Paraphrasing the 1977 CIU report, an Independent MLA described the Freeman-Stein relationship in an April 1979 address to the NSW Parliament: ‘Inquiries show that Freeman was also the Australian contact man for one Danny Stein, nominated as an associate of notorious American organized crime figures, including Meyer Lansky, described by law enforcement authorities as representing hidden interests in Las Vegas casinos and an illegal betting network raided by the Federal Bureau of Investigation and shut down by the State of Nevada’. During his four trips to Australia in the 1970s Stein had been seen often in Freeman’s company.

Their relationship was apparently a close one. A letter from Stein to George Freeman dated June 1974 read: ‘George, I have been having a problem with mail lately. Seems the regular man is having an operation and the substitutes don’t know which end is up. You know I always drop you a note as soon as I receive the money and I haven’t gotten it for June yet. I usually receive the check between the 7th and the 14th of the month.’ In the course of this chatty letter Stein also asked his ‘good friend’ Freeman to buy him ‘three pairs of Speedo Bathing Shorts, size 34 — one in solid yellow and two in other bright colors. I’ll leave it up to you, as you know what I like.’ Freeman may have seemed a crime czar to the NSW Parliament, but to the American Stein he was the kind of subordinate to whom one could assign light domestic duties.

While George David Freeman is allegedly the largest SP operator in New South Wales, he is but one of a number of men who have transformed the nature of illegal off-course betting. The SP networks that developed after the opening of the State TAB are a fundamentally different kind of operation. The majority of SP money is now handed through phone networks concealed by fraudulent corporate addresses. The networks’ runners began to arrive at their clients’ business addresses to settle accounts every Friday. SP betting has become modern, impersonal, and, most importantly, syndicated.

If the basic technology of SP betting has not changed significantly since the 1930s, the lines of power and capital that manage the off-course networks have, according to informed sources, undergone a radical transforation within the last decade. SP syndicates now use electronic equipment to transmit betting information to a central phone agency. The Australian Jockey Club employs detectives and uses electronic devices to block those transmissions, but officials admit privately that interception is difficult and none has been detected in at least five years. Once the odds are transmitted, a single clandestine SP agency telephones them to hundreds of clients. For a nominal fee of $40 to $50 per race day, an SP operator can expect ‘markets’ at four intervals for each race.

This advance warning allows bookmakers to calculate their possible losses, and, in case they are overcommitted, to make covering bets, called ‘laying off’, to other SP bookmakers. It is the need of the SP to ‘lay off’ that has opened smaller operators to take over and control by the larger bookmakers. Particularly on major race meetings, when large amounts are posted on favourites, the smaller SPs are forced to lay off with one of Sydney’s three or four major ‘cartels’ with sufficient capital to accept their covering bets. While the small SP men are quite honest in dealings with their customers and are uniformed about race fixing, large operators have funds and contacts to influence a favourite, by intimidating a jockey or eliminating a particular entrant. Once indebted and unable to pay, the small operator has no choice but to sell out to the SP cartel. Compounded with the high cost of police payments to protect phone networks, this process has led to the elimination of small operators.

Another factor contributing to SP syndication is the growing use of force to protect the illegal networks against bandits and bad debtors. Impersonal phone networks with virtually unlimited credit have necessitated the employment of collection agents with a convincing deterrent to non-payment. And with some SP agencies handling a cash flow equal to that of a small branch bank, a credible deterrent is also a requisite defence against robbery by ‘independent’ bandits.

While these changes are of considerable concern to the veteran SP operators, there has been an additional development during the 1970s which the older independents find particularly disconcerting — the use of SP and legal bookmaking as merchant banking by organized crime. Sydney’s syndicate leaders have found the high cash flow of the bookmaking business a useful source of capital to finance new ventures, launder illicit profits, or raise bail bonds. Veteran SP men feel bookmaking profits are being used to capitalize the drug traffic, and are concerned that the violence of the narcotics world may soon spill over into SP operations. These are the conclusions of Detective Sergeant A. R. Lauer of the N.S.W. police, the author of the 1977 CIU report on SP betting: ‘During my recent overseas study tour it was found that American organized crime is extensively involved in illegal gambling, and it is from this area of crime that the necessary finance is supplied to permit organized crime to operate in areas such as narcotics, the penetration of legitimate business and the corruption of public officials. Our inquiries to date indicate that organized crime in this State is developing along the same lines.’

The growing evidence of linkages between all spheres of Australian organized crime, including narcotics, should warn the State Government of the considerable risk in regarding a single component, like SP bookmaking, in isolation. Organized crime acts like a corporate congolomerate, shifting skilled employees and capital from one sphere to another with a keen eye to profit and political conditions. In the last decade SP has become something less than an Australian cultural tradition and more a manifestation of organized crime’s influence in the State.

Prompted by the debates in Parliament and a growing awareness of the industry’s vast scope, the newly-appointed Police Commissioner, Mr James Lees, launched an assault on SP bookmaking in mid-1979. The new anti-SP campaign attacked the large operators and quickly uncovered a network of betting centres equipped with computers. Police analysis of confiscated records revealed a turnover far higher than previous estimates and indicated some SP operators were financially linked to the drug traffic. Under the leadership of Inspector Mervyn Beck, an officer with a reputation for integrity and efficiency, police 21 Squad constables raided a Tweed Heads SP operation with a $100 million annual turnover, broke through the door of a central Sydney shop with forty phones and discovered an SP computer centre in Ultimo with 10,000 phone accounts. Although the raids by no means eradicated illegal betting, they helped establish its scope and seriousness.

Assuming that the SP networks have not expanded the relative scale of their operations since 1962 when the Kinsella Royal Commission calculated their turnover at £275 million per annum, this amount — taking into account average annual inflation in the intervening seventeen years — would be equivalent to some $1420 million by 1980. Since most illegal bookmakers make an average 10 per cent profit on turnover, excluding SP ‘coups’ on rigged races, the annual profit taking in SP operations in New South Wales would be $142 million — a vast amount of uncontrolled capital readily available to finance organized crime activities such as corporate fraud, political corruption, and, most seriously, narcotics.


from Drug Traffic by Alfred McCoy