Questions raised over campaign checks at center of sweepstakes probe

jneff@newsobserver.com jfrank@newsobserver.comMay 23, 2013 

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This booking photo provided by the Caddo County Sheriff'ss Office shows Chase Burns. Burns, the owner of Anadarko, Okla.-based International Internet Technologies, was arrested Tuesday, March 12, 2013, along with his wife Kristin Burns. Chase Burns is accused of making $290 million after supplying illegal gambling software in Florida and claiming the games' proceeds would benefit Allied Veterans. Florida Lt. Gov. Jennifer Carroll announced her resignation Wednesday, March 13, 2013, a day after she was questioned by authorities regarding her work with Allied Veterans of the World.

AP

— One check is written with loopy cursive handwriting. Another features neat all-capital lettering. And a third is marked by its messy script.

But all bear the signature of the same campaign donor – raising questions about how the checks were directed to state lawmakers and Gov. Pat McCrory and whether state law was violated.

Chase Burns, an Internet sweepstakes company executive who became the largest donor to North Carolina legislative races in 2012, routed much of his $230,000 in donations through lobbyists from Moore & Van Allen, the Charlotte law firm where McCrory worked until days before his inauguration. Burns and the firm were pushing an effort to make sweepstakes machines legal, despite laws and court decisions that shut them down.

The N.C. State Board of Elections has opened an informal inquiry concerning Burns’ contributions to more than 70 Republican and Democratic legislative candidates, the governor and state Republican Party. The probe focuses on the checks – who wrote them, where the money came from and how they were delivered to candidates.

The News & Observer reviewed copies of 34 campaign checks from Burns’ account and found the checks were completed by at least three different people. While the handwriting varied, three distinct styles were used to fill out the “pay to the order of” and amount lines. The most common used two zeros over one hundred in the cents portion, extending a line from the hundred to fill in the amount section. A second uses a consistent ampersand. The third, used on the checks to McCrory, is markedly different from the others.

The signature line on the checks resemble corporate documents in Florida with Burns’ signature. But it’s unclear whether the handwriting directing the contributions is a match to Burns.

North Carolina law requires a check signer to choose the political candidates who receive the check, though others can make recommendations. It also prohibits candidates from accepting a check that lacks either the name of the recipient or the amount. The law reads: “No contribution ... may be made or accepted unless it contains a specific designation of the intended contributee chosen by the contributor.”

If the donor doesn’t pick the candidate, it suggests “that you were essentially aiding and abetting contributions in the name of another because you weren’t really making a specific contribution,” said Michael Weisel, a campaign finance attorney who represents prominent Democratic-leaning groups.

State Rep. Jamie Boles, a Whispering Pines Republican, received one of the checks with the cursive handwriting. Like many campaigns that receive many checks, it didn’t raise any red flags when it came in the mail. He didn’t compare it with others. “It was accepted in good faith,” he said.

Inquiry underway

Even as the informal inquiry is underway, the new Republican-majority state elections board is considering whether to launch a formal investigation, which would allow officials to dig deeper and gather witnesses testimony and additional records.

The last time “blank checks” were an issue was in 2006 when then-House Speaker Jim Black, a Democrat, admitted to the Board of Elections that he accepted checks from optometrists with blank payment lines that he filled out and deposited. The board recommended a criminal investigation that led to Black’s conviction and imprisonment in 2007.

After the Black case, lawmakers strengthened the law to forbid blank checks.

But Roger Knight, a campaign finance lawyer who represents prominent Republican-leaning groups, said how the current law is interpreted and applied to a specific situation remains murky. For instance, he envisioned a scenario where the donor could leave the recipient of a check blank and later direct his lobbyist or assistant to make the contribution to whom he wanted.

“The biggest problem is going to be establishing that a violation occurred, unless someone acknowledges making a mistake and accepting checks with the payee line blank,” he said. “The contributor can, in theory anyway, write a check and leave the payee blank as long as the contributor ‘chooses’ the payee before the check is delivered and the contribution is complete.”

Money source at issue

Burns, his wife Kristin, and 55 others face scores of felony charges in Florida, where prosecutors allege the group, under the guise of a charity helping homeless veterans, used a string of sweepstakes parlors to divert $300 million in untaxed profits for their own use.

Burns and his company, International Internet Technology, have been embroiled in litigation in North Carolina courts. In December, the state Supreme Court ruled that IIT’s machines violated the state law banning video poker. The company has tinkered with its software, saying the changes make the sweepstakes legal.

The checks to North Carolina candidates came from an account titled “Chase Burns Trustee for the Chase Burns Trust.” The bank is MidFirst Bank of Anadarko, Okla., where Burns and his wife reside.

Florida authorities allege that this account is part of a web of bank accounts that Burns used to launder and comingle tens of millions of dollars of illegal gambling proceeds, including about $100 million from Internet sweepstakes cafes in North Carolina that used the company’s software.

North Carolina law prohibits corporate contributions to candidates. A trust can include corporate money and personal money, though, and candidates typically should verify the source before accepting the check.

Bob Hall, the director of the watchdog group Democracy North Carolina, filed the complaint that launched the state election agency’s inquiry and highlighted the possibility of corporate money. “There are a nest of problems here that could point to corruption,” Hall said.

Another factor state officials are analyzing is how Burns’ checks made it to lawmakers and candidates.

Nearly all were dated Sept. 17 or Sept. 19. The exceptions were two checks for $4,000 each from Burns and his wife to the McCrory campaign in August. According to state campaign finance reports, most of the checks were cashed between early October and mid-November.

Moore & Van Allen helped direct the money. Some checks were hand-delivered, others were mailed from the law firm . Many envelopes with the checks inside contained the business card of Thomas Sevier, a Moore & Van Allen lobbyist and former staffer for Senate President Pro Tem Phil Berger, according to records reviewed by The N&O.

The relationship confused a number of campaigns that mistakenly identified Burns as a lawyer with Moore & Van Allen, listed him as director of public affairs at Moore & Van Allen or gave his address as the Moore & Van Allen office , campaign finance records show. Stopped in the halls at the legislative building, Sevier declined an interview request. The law firm did not respond to questions.

Moore & Van Allen dropped Burns and his company as clients after the Florida investigation.

McCrory, Berger and House Speaker Thom Tillis all received money from Burns. All denied meeting him and later donated the contributions to charities to avoid the appearance of impropriety.

“Governor McCrory is not aware of formally meeting Chase Burns, his wife or anyone with the company,” said Kim Genardo, McCrory’s spokesman.

Burns contributed $4,000 to Sen. Josh Stein, a Raleigh Democrat who authored the bill that outlawed online sweepstakes. Stein has no idea why Burns gave him money.

“The issue now is, what do I do with it?” Stein said. “If they find that it was illegally given, I have to give the money to the State Board of Elections.”

Burns also contributed $4,000 to Sen. Jerry Tillman, a Republican from Asheboro, who received one of the checks with an ampersand connecting the dollars and cents.

Tillman said he never met or heard of Burns before the issue came to light in March. Tillman has consistently voted against online sweepstakes and video poker.

“I’d like to ban it,” Tillman said. “There’s no rhyme or reason to this contribution.”

Neff: 919-829-4516

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