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Feds: Sweepstakes cafe operator engaged in illegal gambling

One of the state's largest Internet sweepstakes cafe outfits has run illegal online casinos that trick the public into believing money spent and lost goes to a Veterans Administration charity, a federal affidavit asserts.

The affidavit, filed Monday as part of an investigation into an Oklahoma company that provides sweepstakes software, accuses Allied Veterans of the World & Affiliates of violating Florida gambling laws, obscuring the amount of money that actually goes to charity and engaging in a sham to pretend it is no longer in the industry.

The criminal investigation, which the affidavit says began by the Seminole County Sheriff's Office, now includes the Florida Department of Law Enforcement, the Volusia County Sheriff's Office, the Jacksonville Sheriff's Office and the IRS.

The Florida Times Union, citing an unnamed source, reported Tuesday that three people with Allied Veterans and two executives with the Jacksonville Fraternal Order of Police were arrested by the FDLE as part of a racketeering investigation. The three associated with the company, the Times Union reported, were Jerry Bass, head of the veterans group; Mike Davis, an executive with the group; and Kelly Mathis, the group's attorney.

Allied, which has been one of the state's largest sweepstakes cafe operators, has spent hundreds of thousands of dollars on lobbyists and contributed $25,000 for a Gov. Rick Scott inauguration event. It has battled sheriffs and slapped Seminole County with a lawsuit. Its former public relations firm was once headed by Lt. Gov. Jennifer Carroll.

At the cafes, customers buy Internet time loaded onto a card and get free sweepstakes entries they can reveal by playing games on computer screens that mimic slot machines.

In an affidavit filed in Oklahoma to obtain search warrants, an IRS investigator wrote that Allied "engaged in a conspiracy and scheme to defraud" the public and governmental agencies into believing proceeds went to a charity affiliated with the VA.

Allied said that it devoted at least 70 percent of its net proceeds to charity, the affidavit states, when only about 2 percent actually was.

"Instead of going to charity as is represented, the vast majority of the revenue earned from the gambling operation went to for-profit companies and the individuals who operated Allied Veterans and its 'Affiliates,' '' it states.

The affidavit sough searches of 50 locations in Florida — most outside the Tampa Bay area, but two in Spring Hill — and one in Oklahoma.

Allied began operations in Florida in 2007 and supposedly ended in 2012. But the affidavit asserts the "alleged sale" of cafes was to "the same entities that were already operating them" and the names simply changed.

Feds: Sweepstakes cafe operator engaged in illegal gambling 03/12/13 [Last modified: Wednesday, March 13, 2013 12:43am]

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