SBI investigating sweepstakes donations to NC legislators

akenney@newsobserver.com cjarvis@newsobserver.comJune 11, 2014 

SWEEPSTAKES_05

Rodney Robinson of Concord said as this 2012 file photo was made that he plays a nickel at a time with a limit of $5 whenever he plays near Concord Mills. His favorite games are Wheel Deal, Pot 'O Gold and Snake Eyes. He plays about twice a week. John D. Simmons - jsimmons@charlotteobserver.com

JOHN D. SIMMONS — jsimmons@charlotteobserver.com

— The State Bureau of Investigation is conducting a criminal probe into campaign contributions from the video sweepstakes industry to some of the state’s top elected officials.

The investigation began several months ago but was disclosed Wednesday, amidst a battle for control of the SBI playing out in the General Assembly.

Noelle Talley, a spokeswoman for the Department of Justice, confirmed that “the SBI is investigating campaign donations to state elected officials from the video sweepstakes industry.” The investigation was “initiated” by a federal attorney and the Wake County District Attorney’s Office and has been under way for several months, according to Talley.

Talley declined to disclose the names of the donors or the lawmakers targeted by the investigation or give further details about what wrongdoing was suspected.

Senate leader Phil Berger questioned the timing of the public disclosure of the investigation, which coincides with proposed legislation that would take the power to appoint the SBI’s director away from the Attorney General and give it to the governor and General Assembly. Both House and Senate budgets transfer the SBI, and GOP leaders on Wednesday blocked a Democratic move to stop the transfer.

Berger accused Attorney General Roy Cooper of trying to score points with the public just as the potential move came up for debate.

“I think the fact the Attorney General brings this issue up... at this time just, again, illustrates the reason why we probably need to make the move,” Berger said. “Because that strikes me that is a political pronouncement on his part.”

But the Department of Justice cited the investigation as an argument for keeping the SBI under its control. Moving the SBI from an independently elected Attorney General to the legislature and governor could make the bureau less independent, Talley wrote in an email.

“As with this case, (district attorneys) and U.S. Attorneys rely on an independent SBI to investigate public corruption,” she wrote. “They don’t want the SBI to answer to the very people they may be investigating or who may play a part in legislative confirmation of their director.”

A spokesman for Gov. Pat McCrory played down that possibility.

“We are still reviewing all proposals but the governor believes there should be no politicization regardless of whether the SBI is located in the Attorney General’s Office or the Department of Public Safety,” Josh Ellis, a spokesman for the governor, wrote in an email.

Sweepstakes owners give big

Internet sweepstakes, which once operated slot machine-like games through a legal loophole, have been illegal in North Carolina since 2010. However, the gaming businesses were a constant topic of legislative debate in the years afterward, bringing a flood of money from their operators.

Sweepstakes operators sent $700,000 in campaign contributions to North Carolina candidates between the beginning of 2010 and June 2013, according to data compiled by the watchdog group Democracy North Carolina and The News & Observer.

The biggest donor was Chase Burns, an executive for an Internet sweepstakes company who put about $230,000 into state legislative races in 2012 as he pushed for legalization of his industry in North Carolina. Last year, Burns pleaded no contest in Florida to two criminal counts of assisting in the operation of a lottery and forfeited $3.5 million from bank accounts seized during the investigation.

Bob Hall, executive director of Democracy North Carolina, said the sources and size of the donations derailed the legalization effort.

“Once this story broke in 2013, about the level of money and the involvement at the center of it of people who were being arrested in Florida, the legislation became radioactive, and politicians backed away from it,” Hall said.

The state’s most powerful politicians topped the list of recipients, with House Speaker Thom Tillis receiving the most money – about $127,000 – followed by Gov. Pat McCrory and Berger, according to an analysis of the data by The Charlotte Observer and The News & Observer.

Democracy North Carolina’s complaint prompted the state’s first investigation of the matter last April. Since then, the N.C. Board of Elections has interviewed more than 160 people.

The board has nearly completed a report, which it may send to prosecutors. However, spokesman Josh Lawson said the board had not requested the SBI investigation.

The board launched the inquiry in response to Democracy North Carolina’s questions about who gave the donations and whether the contributions were legal, Lawson said.

Burns was directing money into campaign coffers from a bank account that, according to an affidavit filed by a deputy sheriff in Seminole County, Fla., was involved in money laundering for an “illegal gambling operation.”

“It does involve corporate money, it does involve lobbyists,” Hall said. “It’s the kind of scenario where you want to see where political corruption was happening.”

Further reporting by The N&O found evidence that Burns may have allowed “bundlers” to direct his money, in possible violation of state law. In response, state lawmakers banned the practice in a 2013 elections law.

Burns’ money went to more than 70 Republican and Democratic legislative candidates, plus McCrory and the state Republican Party, according to records reviewed by The N&O. Berger and Tillis also received money from Burns.

McCrory, Tillis and Berger all denied meeting Burns, and later donated the contributions to charities to avoid the appearance of impropriety. All deny that they have been interviewed or subpoenaed during the SBI investigation.

Kenney: 919-829-4870; Twitter: @KenneyNC

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