Arrests, Carroll resignation put long odds of future of Internet cafes
The Internet Cafés that have popped up around the state, which some say are essentially strip mall gaming parlors, appear about to be finished as an industry in Florida.
The president of the Senate and the speaker of the House both said Wednesday that the cafes should be shut down, and a bill doing that is likely to be heard on the House floor as soon as next week. It would almost assuredly pass there and in the Senate quickly thereafter.
Legislative leaders said they wanted the ban hours after state and federal officials announced a massive investigation into the industry, a probe that also led Wednesday to the resignation of Lt. Gov. Jennifer Carroll, who has done consulting work for the organization at the center of that probe.
House Speaker Will Weatherford said the House will take up a bill to ban the storefront businesses next week. Senate President Don Gaetz also said he would "fully support such a ban."
Gov. Rick Scott last year expressed support for banning Internet cafes. But he did not take such a direct stance when asked about it during a news conference Wednesday.
"I think that issue's on the table,'' Scott said. "I want to work with the House and the Senate to see if that is something we ought to be doing."
Law enforcement officials earlier in the day announced a sweeping probe into an Internet café chain operating under the umbrella of a supposed veteran’s charity, but also said the investigation could include other companies in the industry.
The revelation of the widespread probe also led industry lobbyists to jump ship, leaving the cafes with few friends at the Capitol.
Attorney General Pam Bondi, officials from the Florida Department of Law Enforcement and several others said at a press conference in Orlando that a three-year investigation revealed an alleged sophisticated racketeering and money laundering scheme involving 49 centers in 23 Florida counties.
The organization at the center of the investigation is a veterans charity group called Allied Veterans of the World, which purported to be using money raised to assist veterans.
Carroll and her firm 3N and JC, at a minimum served as a public relations consultant to the company in 2009 and 2010 while she was in the House.
The officials declined to discuss any role that Carroll may have played or the potential that other elected officials could still be in the investigative crosshairs.
Florida Department of Law Enforcement Commissioner Gerald Bailey alleged the company wasn't a true charity – and also said the probe will now shift to other café operations that have long claimed to offer "sweepstakes."
"This is the only the first wave of our investigation," Bailey said. "Our investigation suggests that the premise of charity is a lie, a lie to our citizens and a lie to our veterans."
The FDLE claims that less than 2 percent of the $300 million the Allied gambling centers generated in revenue in Florida between January 2008 and January 2012 made its way to any charity.
Scott's chief of staff, Adam Hollingsworth, said Wednesday that Carroll stepped down to avoid "distracting" the work of the executive office.
As of Wednesday, 57 people had been arrested and remained held without a bond limit set, each on: 57 charges of racketeering and influence corrupt organizations (RICO); 614 counts of possession of slot machines; and 614 counts of keeping a gambling house; and 1,265 counts of money laundering, FDLE said.
Bondi said her office will file formal charges next week against those arrested as part of the probe, called "Operation Reveal the Deal."
The investigation began in Seminole County in July 2009 and grew to include law enforcement agencies in South Carolina, Oklahoma and Texas.
The latest sweep started when a federal search warrant was issued Monday by the Oklahoma Bureau of Investigation, Internal Revenue Service and the FDLE on International Internet Technologies, which provided the software for the machines used at the Allied businesses.
Law enforcement alleges that the four primary principles, including two from Florida – Kelly Mathis, 49, and Jerry Bass, 62, both from Jacksonville – allegedly received more than $90 million, with other money going into lobbying efforts.
It couldn't be determined Wednesday who was representing them in the matter.
But at the Capitol, there was almost no call for waiting for that side of the story.
"The case against Allied Veterans of the World makes clear that internet casinos are a breeding ground for illegal activity," Agriculture Commissioner Adam Putnam said in a statement. "I intend to work with the Legislature to shut down these organizations and keep them from defrauding and scamming their clients and, in this case, veterans who were never given their share of the promised proceeds."
Putnam’s office has been involved in a lawsuit with Allied Veterans of the World since November 2011 for failure to provide required documentation as evidence of its charitable activity.
The House Gaming Committee is now set to discuss Internet cafes on Friday. The Senate Gaming Committee is expected on Monday to take up a bill (SB 1030) by Sen. John Thrasher, R-St. Augustine, that seeks to impose a moratorium on new cafes. Thrasher was one of the first lawmakers on Wednesday to call for going further and banning the businesses.
Critics have long contended the cafes illegally operate electronic games that are akin to slot machines, but the industry has said they are legal sweepstakes games.
Former state Rep. Scott Plakon sponsored legislation that passed the House last year to ban the outlets, but the measure failed in the Senate.
He said Wednesday he hoped the arrests will give the proposal a boost to passage.
"I’m interested to see them try to stand behind what is happening here," Plakon said. "I don’t see how you can anymore."
While investigators say the money generated from the cafes also went into lobbying efforts, the industry may find it doesn’t have as much clout with lawmakers as the legislative gaming committees take up the issue.
Last year, International Internet Technologies, which licenses the software to the cafes, spent $740,000 on lobbying the Legislature, according to a lobbyist-compensation report.
But International Internet Technologies’ lobbying team terminated its representation after the announcement of the arrests and law-enforcement searches of Internet cafes.
Sarah Bascom, who runs a prominent public-relations business in Tallahassee, served as a spokeswoman for a group called the Coalition of Florida’s Internet Cafes, which included International Internet Technologies. She said she quickly terminated representation because of "misrepresentation” by International Internet Technologies.
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