Owner arrested for illegal gambling but not charged
EAST ISLES — The contest for an East Isles “Dream House” worth an estimated $1.8 million was back on in July.
The contest was put on hold following the May 28 arrest of Paul Stepnes, the man who built the house at 2857 Irving Ave. S. and devised a contest to give it away. Minneapolis Police said the contest amounted to illegal gambling.
Nearly a month later, Stepnes had not been charged with a crime related to the contest. Stepnes was considering a civil lawsuit seeking damages stemming from his arrest and the disruption of the contest.
Said his attorney, Jill Clark: “He believes the Minneapolis Police are largely responsible for the failure of the first contest.”
Police spokesman Sgt. William Palmer said much of the investigation into the incident had been completed as of July 1. Palmer said information would be passed along to the Minneapolis City Attorney’s Office for possible charges, but no charges had been filed as of July 8.
“The Big Dream House Giveaway,” as the contest is still known, asked participants to guess the number of nuts, bolts and other fasteners in a large box. Each guess cost $20.
Whoever guessed closest to the total without going over would claim the home or a cash prize of $1 million. A cash prize of less than $1 million would be offered if too few tickets were sold to cover expenses for the house, contest and other costs.
There also were weekly drawings for prizes.
Stepnes said he came up with the contest when the house did not sell for almost two years after it was completed in 2006. He has built and remodeled several homes in the Southwest area.
Stepnes argued all along that the contest was “a game of skill” and not gambling. Prior to beginning the contest, he met with the state’s top gambling official and was assured it was OK, he said.
That meeting included not just Tom Barrett, executive director of the Minnesota Gambling Control Board, but also state senate counsel and Sen. Scott Dibble (DFL-60), who is an acquaintance of Stepnes. It took place in Dibble’s office at the Capitol.
Barrett said the contest did not appear to be gambling when he first discussed it with Stepnes. But after Stepnes’ arrest, Barrett reviewed the contest rules and suggested the weekly prize drawings might have crossed a line.
Stepnes said the drawings were not gambling, because there was no charge to enter.
The contest now continues with a new box full of fasteners. Stepnes said police disturbed the contents of the original box when they removed it from the house, and so it was replaced.
Participants in the first contest were offered a refund or a chance to guess in the new contest.
A winner still will be selected Nov. 15, as originally planned. As before, Stepnes still plans to donate some contest proceeds to housing-related charities.
“Our goal is to sell 250,000 tickets,” he said. “If we sell 250,000 tickets, what’s budgeted is to give $1.5 million of that away.”
That part of Stepnes’ plan raised some questions after his arrest. Stepnes said he would distribute funds to local charities through the Chester House Foundation, a nonprofit company.
On the day of his arrest, Carolyn Aberman, a spokeswoman no longer working with Stepnes, described Chester House Foundation as a 501(c) 3 nonprofit. But at that time there was no record of a company under that name registered with the Office of the Secretary of State.
Clark said Stepnes had spoken with an accountant and intended to set up the nonprofit.
“The fact that the 501(c) 3 paperwork wasn’t completed yet doesn’t mean a company didn’t exist,” she said.
A donation in any amount will only be made after Stepnes takes care of his debt on the house, which is in foreclosure. He must also pay back taxes owed on the property and cover the administrative costs for the contest.
In the end, he aims to recoup some of his investment, too.
Clark said a supporter who wished to remain anonymous would provide financial backing for the contest.
“What [Stepnes] has is a benefactor who will step in and redeem the house in order to make the contest work, if necessary,” she said.
Stepnes acknowledged that his arrest, at least initially, had slowed ticket sales. Fewer people were stopping by each day to view the house and take a gander at the glass box.
“I think people have the perception they’re doing something illegal when they come here, and nothing could be further from the truth,” he said.
He was optimistic ticket sales might pick up again over the summer, especially when people flood into the neighborhood for events like the Uptown Art Fair.
To learn more about the “The Big Dream House Giveaway,” visit the contest website at www.2857irving.com.