Legislators scramble to distance themselves from operations and cash of Internet cafes

Florida sheriffs have pleaded for years with the Legislature to close the loophole that fueled the fastest expansion of illegal gambling in decades — so-called "Internet cafes."

Legislators squabbled. Bills languished or failed. But the delay paid off — for lawmakers and the industry.

Threatened with being shut-down, the owners and operators flooded lawmakers with campaign cash and hired a stable of lobbyists with money that police now say was illegally obtained. Among the biggest contributors was Allied Veterans, the purported charity organization that authorities said this week secretly operated electronic slot machines at Internet cafes at 49 gaming centers across Florida.

Allied and related companies donated $2 million to the lawmakers’ campaigns and committees over at least three years, police say.

An analysis by the Herald/Times found that Allied, however, was not alone in writing large checks to political candidates. Another chain of gambling centers, run by Arcola Systems of Florida, layered at least $864,000 in checks on legislators in the last two years. Arcola and none of its representatives are included or named in the investigation of Allied.

With federal and state investigators now preparing indictments on racketeering and corruption charges, the same politicians who have quietly accepted industry checks are prepared to pass a bill to ban Internet cafes.

The House Gaming Committee will take up a bill to ban the gaming centers on Friday, a similar bill will be taken up in the Senate on Monday. Legislative leaders said they hope to get a bill on the governor’s desk by the end of the month.

“We are finally seeing what an epidemic this is that as elected officials we’ve closed our eyes to,’’ said Rep. Carlos Trujillo, R-Miami, sponsor of the House bill. “Seeing the amount of money these institutions made and stole from some of the most vulnerable in our state is really sad.” More here. 

Here is a breakdown of some of the top takers in Tallahassee's Internet gambling gold rush 2011-12:

Legislators react to Carroll resignation, pitch Flores as replacement

Legislators reacted with sadness upon hearing the news Wednesday of the resignation of Lt. Gov. Jennifer Carroll but wasted no time considering replacements. 

"Jennifer Carroll is a very dear friend and anytime you see a friend go through something difficult, your heart goes out to them,” said Sen. Andy Gardiner, R-Orlando. "I think she did probably what was the right thing to keep the governor’s agenda moving forward. And so it won’t be a distraction. But it still hurts. It hurts for her, it hurts for her family.” 

Gardiner said he served in leadership in the Florida House with Carroll. “I just feel for her and her family,” he said.

Gardiner also said that he continues to believe Florida should “do away” with internet cafes. “I think they’re taking advantage of loophole in the law,” he said. “I’ve been pretty consistent. I don’t want to regulate them, I want to do away with them.”

Hours after Carroll's resignation, some South Florida political observers took to Twitter to recommend Sen. Anitere Flores, a Miami Republican, be tapped for the job. Their hashtag of choice: #Anitere4LT.

Sen. Nancy Detert, R-Venice, endorsed that idea. Flores "has all the great qualities of leadership. She's got the background, the experience,'' Detert said. "Geographically she fits. Being Hispanic doesn't hurt in Florida. She's an attractive candidate, smart woman...I don't know if she's interested or where she stands."

House Democratic Leader Perry Thurston called Carroll a dedicated public servant. "I'm very saddened by it,'' he said. "I wish the best to her and her family."

Rep. Dana Young, R-Tampa, said she was fond of Carroll. "She's going to definitely be missed in the Tampa Bay community because of her strong advocacy on behalf of the military and MacDill Air Force Base. We will miss her."

Republican Party of Florida director Lenny Curry, who is from Carroll's hometown of Jacksonville, called Carroll a "great leader for our party and our state.

"She was a terrific advocate for Florida’s military and economic development efforts,'' Curry said in a statement. "Her resignation is disappointing, but she made the right decision to protect both her family and the work she has done to move our state forward over the
last few years.”

Former Rep. Scott Plakon, R-Longwood, who has sponsored a bill to last year to ban internet cafes,  continued his push to get the Florida Senate to agreed to the effort. 

"The Florida House voted to shut down these illicit gambling operations last year,'' he said in a statement. "The Florida Cabinet unanimously agreed. It's now time for the Florida Senate to act to end this scourge on our state."

His bill was written by the general counsel for the Seminole County sheriff, the office that first began the probe and helped to draw federal investigators into the search.

 -- Rochelle Koff, Kathleen McGrory, Toluse Olorunnipa contributed to this report

Update: Internet gambling probe of Allied Vets grows, arrests now in Florida

Update: Jacksonville television is reportiong that the sweep has reached Florida and the head of a local gambling non-profit was arrested there this morning. 

Jerry Bass is the National Commander of Allied Veterans of the World Inc. and Affiliates, Action News Jacksonville reported. He was arrested and booked into the Duval County Jail this morning. His arrest is the result of a six-year long investigation that spans throughout Florida and other parts of the country. Here's their report.

Meanwhile, the Oklahoman reported yesterday that one of Florida's largest operators of internet cafes, Chase Burns of Florida Gaming Promotions and the International Internet Technolgies, is under federal investigation for operating illegal gambling operations in Florida.

Here's the story by reporter Nolan Clay:

Federal investigators allege the owner of an Anadarko company is involved in an illegal gambling operation in Florida that made more than $290 million.

The owner, Chase Burns, 37, denies wrongdoing. “That’s not true,” he said Monday. “What we do is legal.”

His company, International Internet Technologies LLC, supplied gambling software to Internet casinos in Florida that posed as fundraising centers for veterans’ charities, authorities allege.

The company, also known as IIT, has been paid more than $63 million for its computer work for the illegal gambling operation, authorities reported.

An Oklahoma City federal magistrate judge Monday authorized a search of the IIT building in Anadarko for evidence of “conspiracy, mail fraud, wire fraud, operating an illegal gambling business and money laundering.”

Rep. Nuñez to Gov. Rick Scott: Fight Miccosukees to block chance of golf-course casino

@MarcACaputo

State Rep. Jeanette Nuñez is enlisting Gov. Rick Scott in an effort to stop the Miccosukee Tribe from getting the chance to turn a Kendall Lakes golf course into a casino.

The tribe acquired the land in 2001 and then, years after it applied, the U.S. Department of Interior last summer granted the tribe’s request to turn it into “tribal trust land,” which effectively makes it sovereign land outside the control of Miami-Dade County or the state.

Miami-Dade objected, fearing that the golf course could be converted into a casino.

Nuñez said in a letter she sent late Thursday that, as she understands the law, Scott could ensure the land doesn’t become a casino if he objects. She said the Interior secretary, who would have to approve the gaming endeavor, would need to find that a casino would be in the best interest of the tribe and that it wouldn’t harm the surrounding community.

“I am not confident that the Federal Government would take into account the detrimental effects to the surrounding community,” Nuñez wrote. “Therefore, I am respectfully urging that you oppose any and all attempts by the Miccosukee Tribe to further their gambling footprint in this residential area that would be negatively impacted by such an establishment.”

Here’s the background and here’s Nuñez’s letter. Download Nunez

Gambling interests convene meeting, but future of expanded games remains murky

The expansion of casino gambling in Florida will not be on the agenda when the state Legislature convenes next week, but discussion about the industry’s future here is heating up once again.

A group of Wall Street analysts on Tuesday at the Florida Gaming Congress agreed it’s not a question of if destination gambling resorts will arrive in Florida, only when it will happen.

The analysts consensus prediction: at least two or three resorts in South Florida and possibly double that statewide, will open for business by 2020, with Genting Group, Las Vegas Sands and Wynn Resorts the most likely players at least in South Florida. But getting there is not going to be an easy, as was evident at Tuesday’s event held at the Seminole Hard Rock Hotel & Casino in Hollywood. The annual event, sponsored by Spectrum Gaming Group, drew about 150 industry executives, analysts, attorneys, lobbyists and government leaders to discuss the state of gambling in Florida.

“The Miami market is extremely attractive,” said Greg Roselli, executive director of credit fixed income with UBS Securities. “The defeat last year wasn’t surprising. They’re going to have to keep picking away at it.”

Carlo Santarelli, director of gaming and lodging research for Deutsche Bank Securities agreed, “The problem is going to be finding a solution that makes everyone happy.”

Competing interests torpedoed the effort last year and based on the discussion at Tuesday’s meeting it doesn’t seem like a whole lot has changed. Agendas still vary among the various players: the large Las Vegas and Asian gambling companies, the existing pari-mutuel facilities, the Seminole Tribe and business groups like the Florida Chamber of Commerce and Miami-Dade County’s Beacon Council.

The leaders of the Florida House and Senate put a moratorium on any gambling legislation this year, in order to conduct a thorough study of the issue. The legislature last week issued a joint solicitation for vendors willing to perform a detailed market study, which is due to be completed by October.

More from the Miami Herald's Elaine Walker here. 

 

House also creates gaming committee, puts Schenck in charge

House Speaker Will Weatherford on Monday followed the lead of the Senate and announced the creation of a Select Committee on Gaming to study the path of the state into the perilous territory of gambling reform.

Named to head the effort: Rep. Rob Schenck, R-Spring Hill, who also serves as Weatherford's powerful Rules Committee chair.

“The House Select Committee on Gaming will be charged with looking Florida’s gaming activity holistically to determine ways to improve the state’s oversight of the industry,” Weatherford said in a statement. “Under Representative Schenck’s leadership, I’m confident we can determine what changes – if any – are needed to develop a comprehensive policy for gaming in Florida.”

Senate President Don Gaetz, R-Niceville, has created a similar committee and assigned Sen. Garrett Richter, R-Naples, to head it. Richter, a newcomer to gambling regulation issues, has decided to move ahead by the end of February to hire an outside consultant to do a study of the impact of gaming in Florida and assess what economic and revenue impact any changes would have. 

Weatherford has agreed to split the cost of the study -- which Richter estimates could be as high as $400,000. His statement said the goal of the committee will be to establish a "unified, long-term policy for the future of gaming in Florida that serves the best interest of all Floridians" by the 2014 session.

Gambling issues have traditionallly been one of the most perilous hot potato issues for lawmakers to handle.

Legislators in both urban and rural areas of the state represent legacy parimutuel industries of horse and dog racing whose owners perenially ask the state to expand their gaming options to include the now-popular slot machines in order to preserve the jobs and revenue from their declining industries.

But legislative leaders and Gov. Rick Scott have also acknowledged the appeal of the resort-gaming industry, led by the Las Vegas Sands and Genting, which promise handsome tax revenues and swanky resorts if the state allows them to bring full casinos to South Florida. 

Finding the balance between the two arguments -- as well as deciding what to do with the exploding growth of Internet cafes and online poker -- has been stumped lawmakers in the last three legislative sessions.

Adding urgency to this issue now is the state's gambling compact with the Seminole Tribe of Florida, which expires in 2015. Gaetz and Weatherford have acknowledged that they plan to renew or alter that before their terms end in 2014. 

“Gaming is an issue that requires a careful consideration of existing law before any decisions are made regarding the industry’s future in Florida,” Schenck said in the statement.  “I look forward to conducting a comprehensive review to set a long term vision for the future of gaming in Florida.”

 

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Weatherford and Gaetz expect gambling bill focused on compact on agenda

Genting announces it will back off of a casino amendment

Senate and House agree to one more study to determine fate of treacherous gaming policy

The Florida Senate Committee on Gaming continued to do what its chairman said was to “creating the foundation of understanding” for a sweeping rewrite of the state’s gambling laws, which is expected to come next year.

In an unusual move, Senate Committee Chairman Garrett Richter, R-Naples, has reached an agreement with House leaders to pay for an independent company to conduct a study about the economic and social impact of the state’s existing gambling laws on the state economy and what impact of expansion or changes might have.

“We’ve got a lot of work to do,’’ Richter told the committee at a hearing on Wednesday. He said the committee may not meet during the upcoming session as they await the results of the study and he expects  legislation to wait until next session.

The request for proposal will come sometime before lawmakers convene in regular session on March 5, he said. But the breadth and scope of the study, as well as who will conduct it, is still undetermined.

“A study can sometimes get you where you want to go,’’ said Sen. Andy Gardiner, R-Orlando, who asked what the RFP will look like. 

“It’s a work in process,” Richter responded.

Genting announces it will back off of a casino amendment

In a major shift in strategy, the Malaysian-based casino giant, the Genting Group, told legislative leaders this week that it will stop efforts to pursue a petition drive to get a casino amendment on the 2014 ballot and will instead wait until lawmakers complete a comprehensive review of where to go with future gambling in the state.

“We are not going forward with a petition drive effort and there have not been any petitions gathered,’’ said Brian Ballard, a lobbyist for Genting, after meeting with legislative leaders. “The approach the Legislature is taking with this – a thoughtful analysis – we think makes absolute sense and we want to be a constructive player in it.”

Genting led the failed effort earlier last session to bring destination resort-style casino gambling to Florida. The measure never made it out of a House committee and was loaded down with complicating provisions in the Senate before it was declared dead.

During the past election cycle, Genting created a political committee — New Jobs and Revenue For Florida — and spent more than $905,000 on voter petition consultants, constitutional scholars and pollsters in an effort to set the stage for a constitutional amendment to make casinos legal that would go before voters in 2014.

Miccosukees lose round in legal war against IRS over unpaid taxes

The Miccosukee Indians must turn over loads of confidential financial records that could help the U.S. government as it seeks to collect tens of millions of dollars in taxes from tribal members who received gambling profits as personal income, a federal appeals court ruled Monday.

The West Miami-Dade Tribe, which operates a casino complex that features bingo-style slot machines and poker, has run out of legal moves. The 600-member tribe can ask for a full hearing before the 11th Circuit Court of Appeals in Atlanta, but legal experts say it would be futile.

A negotiated tax settlement between the tribe and the Internal Revenue Service would likely be the next scenario. The tribe’s main lawyer, Bernardo Roman III, did not return a call for comment.

The Miccosukees, deploying their status as a sovereign nation, have been fighting for years with the IRS over access to their banking, securities and other records. The federal agency says it should be allowed to examine those records because it has reason to believe the tribe has failed to deduct and withhold income distributed from its gambling enterprise to members for the past decade.

The appeals court sided with the IRS, rejecting the tribe’s sovereign immunity argument that the IRS has no legal right to its records held by American Express, Citibank, Morgan Stanley and Wachovia Bank. The three-judge panel also rejected the tribe’s argument that the IRS’ summonses for its financial documents dating from 2006 to 2009 were issued for an “improper purpose” and were “overbroad.”

The appellate panel, like a Miami federal judge who has handled the raging dispute, ruled that “Indian tribes may not rely on tribal… immunity to bar a [legal action] by a superior sovereign,” the U.S. government.

The federal agency’s legal battle with the Miccosukees began in 2005, when the tribe’s high-profile lawyers argued to the IRS that tribal members didn’t owe any income taxes. Each member receives from $120,000 to $160,000 a year from the tribe’s gambling profits. The tribe, which has tried to use its sovereign status to block the IRS’ civil probe, might now be on the hook for taxes owed by many of its 600 members. More from Jay Weaver here.

Read more here: http://www.miamiherald.com/2012/10/15/3051620/irs-wins-key-legal-battle-as-it.html#storylink=cpy

Genting's political check writers have had a busy few weeks

Genting's political check writers, who had taken a bit of a break since the legislative session ended without passing their casino resort legislation, have been busy. The Malaysian-based casino giant has written a whopping $431,000 in campaign contributions since July 16, during the run-up to the primary.

The largest chunk of money -- $189,000 -- went to the company's newly formed political committee as it prepares to put a constitutional amendment on the November 2014 ballot. (Presumably they are polling ballot language to give to petition gatherers on election day.) The rest of it went to mega contributions to the political committees of some key legislative players such as Sens. Jack Latvala and Joe Negron. Who is the Republican to watch in the casino-resistant House? Jason Brodeur of Sanford.

Here's our list from both Genting's coffers and Bayfront Development LLC, Genting's Miami-based development company: