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September 10, 2015 12:00 pm
NC Family president John Rustin talks with Bob Hall, executive director of the political watchdog group, Democracy NC, about the corrupt nature of the video sweepstakes gambling industry in North Carolina, and why state lawmakers need to reject any effort to legalize sweepstakes gambling in the Tar Heel State.
This is family policy matter program is produced by the North Carolina family policy Council of profamily research and education organization dedicated to strengthening and preserving the family and up from the studio here is John Rustin, Pres. North Carolina family policy Council, thank you for joining us this week for family policy matters. We are pleased to have Bob home with us on the program. Bob is Executive Director of the political watchdog group democracy North Carolina which is based in Durham, North Carolina.
He's been involved in grassroots politics since 1970 and has served on numerous nonprofit boards and governmental commission provide expert testimony in court cases and consulted with officials and a dozen states on voting rights and campaign-finance reform. Although we don't always see on policy issues. The North Carolina family policy Council and democracy North Carolina work together on a number of issues over the years, including reforming our states lobbying and ethics laws as well as shining a bright light on the myriad of bills inherent with legal and illegal gambling.
Bob is with us today to talk about the corrupt nature of some of the players in the video sweepstakes gambling industry in North Carolina and why are state lawmakers need to reject any effort to legalize this extremely predatory form of gambling club all it's great to have you with us on family policy matters. Thank you for inviting me. Well we been working in the trenches together for years and years all gambling related issues and were very grateful for the work that you do before we begin let's define some of the terms that will be talking about today one of those is the video sweepstakes of the sweepstakes industry when we talk about sweepstakes and and video sweepstakes aren't we essentially talking about the video poker industry that the state attempted to get rid of years ago the same thing. They have the industry and continually tried to morph themselves into new ways of luring people into gambling.
The latest iteration called the sweepstakes or storefronts with the computer terminals and the software in them is now what controls the day whether you win or lose. It used to be the freestanding consuls like an ATM machine that you would punch and all the mechanisms were right inside that machine now of these terminals. The computer terminals are wired often as in the case of this scandal were talking more. More recently there connected to a software supplier and so there there's a little bit different in the machinery. But the bottom line is it still gambling and lots of flashing lights to get you to spend money well and as we've talked about. You have been investigating possible political corruption in the video gambling industry, North Carolina for many years, some of which has come to fruition. Unfortunately for state enforced the government and our reputation and so forth. Tell us how you got involved in this issue initially and how much money the video gambling industry. As far as you are aware, is poured into efforts to legalize video gambling in North Carolina while well it millions of dollars that they have invested in campaign contributions and $10 million that they've invested in lawyers and lobbying to try to get their game legalize or protect them from being the one manner or another.
I guess I got I've been tracking a as I have for a long time. I track campaign contributions in the know, the quid pro quo are donors seeking and getting something in return for the money they put into the system that just corrupts the whole way. Our democracy works in an organization and I personally have been fighting that so it was a pattern of donations that were concentrated. I mean II think I thought only back to the Mike Easley days when he was the Atty. Gen. and made a ruling that made it difficult for sheriffs to go after the video gambling machine and was very suspicious to me, and then looking at seeing there was a whole lot of video poker money that went into his Atty. Gen. camping and then he abandoned that money but when it was exposed later on Jim Black the House Speaker, I was looking through his reports of all bunch of strange things and started calling people in learned that they were scrawled donors. These were phony names were put in the report to that actual video poker operators and filed a complaint against the then House Speaker Jim Black so it's it's been an ongoing thing piece of reality that our listeners really need to understand that this is an issue that the state is attempting to get rid of. Year after year, but it continues to rear its ugly head, and there will bills actually introduced at the beginning of this legislative session that would have essentially legalized the sweepstakes gambling operations in North Carolina.
Instead of seeking to crack down and get rid of these gambling operations. It would have legalize attacks of them attempted to generate revenue for the state as we sing with the state lottery and natural thing. Now I know that you have filed a complaint with the North Carolina Board of elections about possible wrongdoing by lobbyist and other members of the video sweepstakes industry, North Carolina tell us about that complaint and why the state board of elections decided not to follow-up on the complaint.
Despite past and present evidence of corruption or illegal attempted influence well at that complaint we filed in 2013.
After looking at the 2012 campaign reports and story that came out of the Associated Press of how the video sweepstakes want to be software suppliers was based in Oklahoma. He was arrested in Florida for the operation. He ran there for illegal gambling, racketeering, money laundering, and so on.
It turned out he was making contributions in North Carolina as we discovered he actually was the largest political donor in the 2012 election to state legislative candidates. He gave over $250,000 believe that I from Oklahoma. He was trying to exactly what you say trying to get legalization of his industry.
They want to be regulated.
They want to be taxed.
They want politicians to believe that they get the money if you just put it under your wing on a protective in this new framework where we be legal, but he was using a trust account to make these political donations. The money came from his gambling Corporation into that trust account. The checks were actually written by his business associate by his administrative assistant for as they would fill out the check. They followed a script of a hoot or send a check to from the lobbyist lobbyist was contracted by the Corporation are alleged complaint was that this was a corporate indirect corporate contribution which abandoned North Carolina corporation can't just take money out of the treasury give it to politicians so that was a major part of our complaint. There were several other elements of that we could talk about but the board of elections. Eventually they did long investigation they came up with a lot of interesting material but in the end they decided that account that was used to make the contributions was a personal account because it was associated with Social Security number, not with the federal employer identification number. We we think that the very simplistic way to let this operation go scot-free.
And so we are deftly pursuing this now get the US attorney involved get the district attorney involved because we do think that there is a corporate business enterprise operation that was being done some research and I've heard his name, multiple times when the sweepstakes is usually nothing for the benefit of the listeners is important to understand that the time was in the depths of operations of this gambling industry talk if you would a little bit about this individual chase burns what you know about him. His involvement in other states and maybe a little bit more about his involvement in North Carolina, will the owner of this company. I tear international Internet technology and that based in Oklahoma. They provide the software that goes in side the computer terminal machine. They control the basically of whether damage how the winners are in losers will be determined as they approached that they get on it terminal machine. They service these mom-and-pop sweepstakes café that are all over North Carolina, Florida, all Oklahoma that many, many state he operates in the mom-and-pop operator pays them a percent of the take and what he was doing in North Carolina. He would add on a 3% surcharge to the 25% that they had to pay and that 3% was used to pay for lobbyist and pay for lawyers to protect the industry when they would get arrested for their illegal operation or and then fight with lawyers through the chain of the court cases.
So is it turned out that that the 3% was almost $10 million in North Carolina alone just to say that about $300 million to get 10% of the 3% no return so you do it big money that they were investing again. This is one thing, the board family found the roster where that money went and who the lawyers were one of the things that is my hope is that one of the law firms that was hired to take the court cases for chase burns Kilpatrick Stockton and the partner in that firm was on the board of elections during the investigation of our complaint and did not recuse himself actually got heavily involved in monitoring that investigation, impressing the board staff and not telling them that he had a conflict of interest and it was very embarrassing for them, but he ultimately resigned, but you know overall that the industry is they just have a tremendous amount of money to spend in this effort to gain protection will Bob just a few additional examples of how you think the sweepstakes gambling industry has violated state and federal laws in North Carolina well one of the laws that is on the federal books is a thing called the Hobbs act, which says it that a person giving something in exchange for the favor of a pull public action by a public official can be a violation of bribery essentially of where they are giving to the official with the expectation that they're going to get something in return and is quid pro quo correct the quid pro quo yet and and even if the liquid is not given for the glow of their is still a violation that is essentially the that donor has Lord been lured into giving the money with the expectation that they're going to get something so that kind of transaction is a federal violation and we have state statutes against bribery against extortionists on the money laundering. It looks like this bank account. This trust account money came in from the Corporation and then it was used invest in land operations basically to clean up the money from being gambling money to clean it up. Putting into real estate put in the thing and then became more personal money, but it was in them is also used for political contributions or issues around taxes are they paying their fair share of taxes. All this money cash that comes in this and that's one of the problems that the shirt of the law enforcement people will point to is when you have an industry like this was so much cash you're going to get the corruption will no doubt about it and that's what we've been working along with colonic and other groups all along the political spectrum for years in North Carolina to continue to encourage all legislators to reject efforts to expand the form of legalized gambling and also enforce laws against illegal gambling in North Carolina. We appreciate so much your work on that and we stand by you. We were definitely pleased to see a number of months ago, the US attorney enter into agreements that essentially told many of these sweepstakes software companies to leave the state and that if they if they left the state by July 1 in the US attorney would not prosecute them for what I think he identified quite clearly as illegal gambling operations in North Carolina so were hopeful that with all these actions with your investigations and what you're doing and as the light is shown more brightly on this corrupt industry that we will not have to deal with this much longer in North Carolina but clearly you have so well laid out. There's a tremendous amount of money behind this industry. When individuals from out-of-state or pulling hundreds of thousands of dollars in the political campaigns in North Carolina. You got ask questions about what the intention of that is. And so we appreciate all that you're doing. Thank you, John will bombard with democracy North Carolina unfortunately we are out of town for this week, but I want to thank you so much for your work on this issue for your willingness to share your findings with our listeners today and just for championing the skulls in North Carolina.
I will carry out together since family policy matters. Information and analysis, future of the North Carolina family policy Council join us weekly for discussion on policy issues affecting the family. If you have questions or comments, please contact 919-807-0800 or visit our website and see family.org