Millions of dollars poured into North Carolina political campaigns in recent years in a futile attempt to keep the video sweepstakes industry legal – much of the money at the direction of a man later charged in Florida with racketeering.
The free-wheeling spending on politicians, lawyers and lobbyists has raised suspicions, although one probe, by the state elections board, found no campaign finance violations. Campaign and ethics watchdogs hope state or federal prosecutors will pick up the trail and investigate more deeply.
The elections watchdog group Democracy North Carolina, whose complaint prompted the two-year elections board inquiry, now wants the U.S. attorney and the Wake County district attorney to determine whether laws against corruption, bribery or other offenses were broken, and for authorities to take another look at potential election law violations.
Wake District Attorney Lorrin Freeman said this week that she is reviewing the request by Bob Hall, executive director of Democracy North Carolina, and the elections board investigative report but that she hasn’t determined what to do.
Hall says in a letter to authorities that the elections board could have investigated multiple issues further. He also alleges that a board member’s inappropriate inquiries into the investigation – and his failure to disclose that the law firm he worked for represented the industry’s main player – compromised the probe.
The report doesn’t connect the dots to all the money that changed hands.
Bob Hall of Democracy N.C.
Another SBI probe?
“The report doesn’t connect the dots to all the money that changed hands,” Hall said Wednesday. “The DA and U.S. attorney have additional tools to investigate bribery, tax evasion, racketeering and public corruption. They need to use those tools for this case, as they have in the past.”
Freeman said among her options is asking the State Bureau of Investigation to look into it further.
The SBI began looking into campaign donations from the video sweepstakes industry early last year, but by July, when the elections board report was made public, the agency said the case was closed. Freeman said she didn’t anticipate taking the matter to a grand jury without further investigation.
The district attorney also said she would work in conjunction with U.S. Attorney Thomas Walker if either office decides to proceed. Last month, Kim Strach, executive director of the State Board of Elections, said her office had previously provided information to the SBI, and early in the investigation met with the U.S. Attorney’s Office at its request.
Walker, the federal prosecutor, could not be reached for comment.
Josh Lawson, elections office general counsel, said the office was preparing a letter to send to Freeman and Walker reiterating its willingness to provide any additional material and describing the investigation. The elections board members said when they made the investigative report public that any law enforcement agency was welcome to pursue the matter.
Last month, Strach said her office spent close to two years interviewing more than 200 people and reviewing more than 13,000 spreadsheets, bank records and other documents. Two elections investigators, one of them a former FBI agent, met with a sheriff’s task force in Florida that spent three years investigating video sweeps executive Chase Burns, the man who funneled millions to North Carolina.
Despite all that, Strach said her investigation was unable to prove or disprove that illegal money from Burns flowed into North Carolina. North Carolina investigators were not able to interview Burns, nor obtain his federal tax records.
Some members of the five-member Board of Elections expressed frustration that campaign finance laws were insufficient to cover what might be other criminal violations. They noted records showed millions of dollars moving through Burns’ personal and business accounts, and subsequent payments and political contributions in North Carolina.
The two Democrats on the board, Maja Kricker and Joshua Malcom, said someone could make political contributions with money from illicit proceeds and that wouldn’t violate state campaign finance laws. Strach said that was correct, regardless of how they obtained the money, so long as they were using their own money and they weren’t trying to hide where it came from.
Burns, who pleaded no contest to lesser charges, could not be reached Wednesday.
In his letter to the prosecutors, Hall details examples of what he calls potential political corruption, illegal bundling of campaign contributions, money laundering, illegal corporate donations and abuse of office.
Hall’s efforts to expose political corruption have led to reforms in finance and lobbying in the state. He helped document video poker contributions that led to the prosecution of then-House Speaker Jim Black in 2006, who admitted to accepting thousands of dollars in checks with blank payment lines that he filled out and deposited. He was convicted an imprisoned in 2007.
Political corruption, illegal bundling of campaign contributions, money laundering, illegal corporate donations and abuse of office are the allegations.
Hall’s eight-page letter raises questions that he says the elections report didn’t adequately answer, among them:
▪ Florida investigators said in an affidavit they found millions of dollars had been received and transferred through Burns’ trust account in “illegal proceeds” from his sweepstakes business in “layered transactions” that “laundered the funds of the illegal gambling operation.” Burns used the same account to write $274,000 in campaign donations to North Carolina candidates and political committees.
▪ Burns’ corporation collected a 3 percent surcharge from sweepstakes café owners to establish a fund for lobbying and legal expenses in North Carolina, according to the elections probe. Burns used a similar scheme in Florida, where some of the surcharge went directly to campaign donations. North Carolina officials didn’t find a similar link, which would have been illegal in this state.
▪ A major sweepstakes operator had meetings in 2012 with Pat McCrory, who was then running for governor, then-House Speaker Thom Tillis and Senate leader Phil Berger to talk about the sweeps industry, and talked about raising money for them, according to the elections report. Democracy N.C. found more than $260,000 in donations to those three men from sweepstakes interests in the 2011-12 election cycle. Those politicians and others later sent Burns’ donations to charity.
▪ One lobbyist with the large Moore & Van Allen firm, where McCrory worked while running for governor, admitted to state investigators that he gave Berger an envelope with checks from multiple donors at a fundraising event. But lobbyist Tommy Sevier said he did it because Berger had forgotten it as he was leaving, and Sevier chased him down and gave it to him. State law at the time prevented lobbyists from delivering bundled contributions; now the law forbids them from delivering even a single contribution.
▪ Sevier also said on another occasion he gave Walter Dalton’s gubernatorial campaign checks from multiple donors. The lobbyist’s lawyer said it wasn’t illegal because a violation of the law required a lobbyist to collect, take possession and deliver contributions. Strach said she disagreed with that interpretation, but acknowledged there was no criminal penalty connected to the statute anyway. The board decided not to refer that incident to the district attorney. Hall contends that court rulings in North Carolina have held that violations of a state law that don’t carry a specific penalty can be prosecuted as misdemeanors.