The American Legion post that has organized Bath’s annual Memorial Day parade for years says it can no longer afford to support the parade after the organization pleaded guilty to felony charges of conducting illegal gambling, an operation the county prosecutor says involved payouts of “hundreds of thousands of dollars” over a period of years.

Monday’s Memorial Day parade has been canceled, City Manager Bill Giroux confirmed in an email Monday night. Officials from the Smith-Tobey American Legion Post 21 notified the city in a May 7 letter that the parade would have to be canceled because of “severe financial difficulties.”

Giroux declined to comment about the post’s legal troubles, but Sagadahoc County Assistant District Attorney Jon Liberman confirmed Monday night that his office had reached a plea agreement with the organization. The post pleaded guilty April 27 to one count of aggravated unlawful gambling, a Class B felony, and was ordered to pay the state an $18,000 fine and court costs. Six additional counts were dismissed.

Under the agreement, the post also surrendered its license to operate games of chance for 30 months, Liberman said.

The illegal gambling operation paid cash winnings to patrons who played video poker on the organization’s four machines. Liberman said. The machines are not illegal, but state law forbids cash payouts. No American Legion post members or patrons were charged.

“It’s safe to say that hundreds of thousands of dollars were obtained illegally. We’re not sure how much money was involved, but during one two-year period the Legion post gained $350,000 from illegal gambling,” Liberman said. “We know the organization benefited, but I never saw any evidence that would indicate that one person gained from this.”

In his four years serving as a prosecutor, Liberman said he has never come across a gambling scheme like this that went on for years. Maine State Police began investigating the Smith-Tobey post last year after receiving an anonymous tip.

“Statewide, we don’t see a lot of these cases,” Liberman said. “But it’s a case we took very seriously because of the amount of illegal funds that were being gained.”

On May 6, the former head of the Madison Veterans of Foreign Wars post entered no plea to charges he made illegal payouts to patrons who played a video poker game at the VFW. Louis Padula, 71, of Anson is scheduled to appear again in court May 27. State police allege that Padula had been overseeing payouts at the VFW for several years.

State police said that while certain types of gaming are legal, such as bingo and card games, profiting from video poker games is not.

Giroux, the city manager, said in his email that “many in the community intend to help to make sure there is a parade next year.”

Smith-Tobey Post Adjutant Michael Frelk declined to discuss the court case when contacted at his home Monday evening, but said the post hopes it will be in a position to organize the 2016 parade.

“The post is going through some difficult times now,” Frelk said. “We are trying, to the best of our ability, to restructure our organization and general income.”

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