Laundered Money From Illegal Gambling Used for NC Campaign Contributions

(Associated Press) - A checking account used last year to make $235,000 in donations to the campaigns of dozens of North Carolina politicians contained the laundered proceeds of a criminal gambling enterprise, according to Oklahoma's top law enforcement official.

The political donations were drawn from one of several accounts tied to sweepstakes game provider Chase E. Burns of Anadarko, Okla., who in September pleaded no contest in Florida to two criminal counts of assisting in the operation of a lottery. As part of a plea deal, prosecutors dropped 205 felony counts against Burns, including racketeering and money laundering charges. He is currently awaiting sentencing.

Last month, Oklahoma Attorney General Scott Pruitt finalized a separate agreement in which Burns agreed to forfeit $3.5 million from bank accounts seized as part of the investigation. According to Pruitt, the money came directly from the "laundered proceeds" of Burns' sweepstakes software company, International Internet Technologies.

Court filings reviewed by The Associated Press show $1 million of that forfeited money came from a checking account in the name of the Chase Burns Trust - the same account used to send political donations to the campaigns of North Carolina Gov. Pat McCrory, state House Speaker Thom Tillis and Senate leader Phil Berger, among others.

"There are severe and sustained consequences for breaking the law in Oklahoma, and I hope this sends a message to anyone considering profiting from illegal gambling," Pruitt said when announcing the seizure. "I appreciate the cooperation of the State of Florida and the Oklahoma State Bureau of Investigation. With their assistance, we were able to secure criminal and civil charges for these individuals and shut down their illegal gaming and money laundering activities."

The AP reported in April that the donations to North Carolina politicians from Burns may have violated state laws prohibiting corporate money from being used to "directly or indirectly" fund political campaigns.

Court records from Florida show that money flowed into the Chase Burns Trust account directly from the software company's corporate accounts, which received millions in proceeds from sweepstakes parlors using Burns' software in North Carolina and other states.

North Carolina's legislature has passed three laws in recent years declaring electronic sweepstakes games illegal. Each time, the industry has come up with software tweaks they claim make the games comply with the law. Local sheriffs and prosecutors who have raided and shut down sweepstakes games in their counties have often been sued by those who own the parlors.

Checks from Burns accounted for nearly half of the total $520,000 in political donations from sweepstakes operators that flowed into the campaign accounts of more than 60 elected officials from both parties since 2010. Burns was the largest individual donor to North Carolina candidates in the 2012 election cycle.

The money was part of a well-funded lobbying effort by the sweepstakes industry with the aim of winning legalization for the games. Records show that nearly all of Burns' political giving was handled by the Charlotte offices of Moore & Van Allen, the law and lobbying firm where McCrory worked until days before he was sworn in as governor.

Documents show many of the sweepstakes checks were mailed to state lawmakers shortly before the November election, in envelopes printed with Moore & Van Allen's letterhead, postmarked from the firm's Charlotte ZIP code and containing the business card of a firm lobbyist. The effort to pass a sweepstakes legalization bill in North Carolina collapsed after Burns' arrest in Florida, triggered by probes into a homeless veterans charity prosecutors said was a front for collecting nearly $300 million in untaxed profits from sweepstakes cafes.

McCrory, who has denied any knowledge of the checks sent from the lobbying firm where he worked, directed his campaign to give to charity $18,000 tied to Burns and other sweepstakes donors indicted in Florida or Ohio. The campaigns of Berger and Tillis also gave money received from Burns to charity.

Campaign finance watchdog group Democracy North Carolina filed a sworn complaint in late April urging the North Carolina Board of Elections to investigate the political donations made by Burns, as well as 10 other sweepstakes donors.

Nearly seven months later, Board of Elections director Kim Strach said she is still investigating whether the Burns donations violated the state ban on corporate contributions. She said she hopes to complete the probe early next year.

However, there is no state law that would bar political campaigns from receiving proceeds gleaned from a criminal enterprise, as long as the checks came from an individual rather than a company, Strach said.

"The prohibition on whether or not the prohibition is legal is whether or not it is from a prohibited source, such as a corporation, a business entity, a professional association or an insurance company," Strach said. "Those are the sources we are looking at to see if the contribution is legal."