By MICHAEL BIESECKER and MITCH WEISS
Associated Press
State elections officials are calling for an investigation of $235,000 in political donations to dozens of North Carolina candidates from an Oklahoma sweepstakes operator, contributions that they say may have violated state campaign finance laws.
Gov. Pat McCrory, state House Speaker Thom Tillis and Senate leader Phil Berger are among those who received the checks, many of them mailed from a Charlotte lobbying firm where McCrory worked until just before he took office.
Lawmakers, meanwhile, are considering legalizing the games, which are still offered across the state despite the passage of three laws intended to ban them, most recently in 2010.
Court records from Florida examined by The Associated Press show that the checks were drawn from an account that received funds directly from International Internet Technologies, a company that earned millions of dollars in profits from what prosecutors allege was a criminal gambling enterprise.
The company's owners, Chase and Kristin Burns of Anadarko, Okla., were among 57 people arrested by Florida authorities last month on felony charges related to a charity that purported to help homeless veterans but that prosecutors say was a front for collecting nearly $300 million in untaxed profits from sweepstakes cafes.
Such cafes rely on software provided by the Burns' company and others to run the games, track who's playing and determine who wins. In return, the software companies keep up to a third of the profits.
Bank records subpoenaed as part of the Florida investigation show that the Burns' company also received more than $98 million in about four years from North Carolina sweepstakes cafes using the company's software. The records show large cash transfers then were made from the company's account to a checking account labeled Chase Burns Trust, the source of the North Carolina political donations.
State law prohibits corporate money from being used to "directly or indirectly" fund political campaigns.
Checks tied to Chase 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.
Briefed on the AP's findings, the elections board's Democratic chairman, Larry Leake, and ranking Republican member, Chuck Winfree, said the state agency should investigate the donations from Burns. The five-member elections board, which has the authority to issue subpoenas and call witnesses to testify, typically follows the lead of Leake and Winfree in light of their seniority.
Elections staff have already been conducting a preliminary review of the donations, records show.
"If the money from the corporation made its way to the campaigns, then to me that would be illegal contributions," said Leake, an Asheville lawyer who has served on the board 20 years.
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 in January.
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 firm lobbyist Tommy Sevier, according to documents obtained by the AP through a public records request.
Sevier previously worked as a deputy chief of staff for Senate leader Berger and deputy chief of staff to then-U.S. Rep. Robin Hayes, current chairman of the North Carolina Republican Party.
Brian Nick, a Moore & Van Allen lobbyist who previously served as a spokesman for McCrory's 2012 campaign, said the firm had no reason to think the money was tainted.
"We were sent individual contributions from Mr. Burns to certain candidates," Nick said last week. "Nothing indicated that the contributions were not in accordance with North Carolina election laws, and we delivered them as requested."
In a series of interviews, sweepstakes operator William George of Rock Hill, S.C., said he and others pitched in with Burns to hire Moore & Van Allen because the firm had the political connections needed to shepherd the industry's bill through the GOP-dominated North Carolina General Assembly.
Well before the November election, McCrory was widely viewed as the state's chief executive-in-waiting.
"Hell, everybody knew he was going to be the next governor," said George, who also wrote a $4,000 check to McCrory's campaign. "Do you know anybody who gives money to a politician that's not expecting something in return?"
Last month, a bill was introduced in the North Carolina House to legalize and tax the Internet cafes, which offer electronic games mimicking Vegas-style slots where players who purchase minutes on the computers can win money through entering "sweepstakes." The measure was introduced by Republican Rep. Jeff Collins and Deputy Democratic Leader Michael Wray, whose campaigns got more than $6,000 in campaign checks from Burns and other sweepstakes donors.
"The governor does not support this legislation, and has encouraged law enforcement to enforce the current law," said Kim Genardo, McCrory's spokeswoman.
Not all the checks from Chase Burns came through the mail. Wake County Republican Rep. Tom Murry reported to elections officials that his $2,500 check from Burns was hand-delivered shortly before the November election by Moore & Van Allen lobbyist Cameron Henley.
Murry is the chairman of the committee now considering the sweepstakes legalization bill.
The General Assembly has passed three laws intended to ban video poker and electronic sweepstakes, most recently in 2010. Each time, sweepstakes operators have filed court challenges and made software tweaks they say keep the games legal. In December, the state Supreme Court unanimously ruled against the industry to uphold the state's most recent ban, clearing the way for law enforcement officers to shut the cafes down.
McCrory told the AP last month that he never participated in any conversations with lobbying clients about electronic sweepstakes. He said his campaign recently gave to charity $18,000 tied to Burns and other sweepstakes donors now under indictment in either Florida or Ohio.
Late Tuesday, Genardo wrote in an email to the AP that "the governor was clearly referring to Chase Burns, Florida clients and no one else in his answers."
She went on to say that while running for governor last year and in 2008, McCrory "met with both proponents and opponents of the sweepstakes industry. His campaign followed campaign finance laws."
All told, McCrory's campaign received more than $82,000 from sweepstakes donors, according to an analysis of disclosure reports by the AP and campaign finance watchdog group Democracy North Carolina.
Speaker Tillis' campaign got more than $87,000 in contributions tied to sweepstakes donors, including $6,500 from Burns. Senate leader Berger got nearly $60,000, according to the AP analysis, including $8,000 from Burns.
Tillis spokesman Jordan Shaw said Tuesday the speaker's campaign had donated its political contribution from Burns to a North Carolina veteran's charity. Berger said Monday his campaign will donate its money from Burns to charity and reiterated his past opposition to sweepstakes games, including his vote for the 2010 ban.
Burns also sent $55,000 to political committees operated by the North Carolina Republican Party. GOP Chief of Staff Mike Rusher said he could not comment on the money or whether the party will donate it to charity.
Facing felony racketeering and conspiracy charges, Burns is currently free on a $500,000 bond and fighting his extradition to Florida. Drew Neville, an Oklahoma City lawyer representing Burns on the criminal charges, said he could not provide comment on any of his client's North Carolina campaign contributions.
Winfree, a Republican who has served on the North Carolina Board of Elections 12 years, said he would want to know when Burns created the trust account and whether he did so with the intent of funneling funds from his corporation to campaigns.
"When this money was transferred from the corporation to the trust, was there an understanding that the trust would then make campaign donations the corporation could not make?" asked Winfree, a Greensboro lawyer. "If that's the case, then that would be illegal."
Moore & Van Allen dropped Burns' company as a client last month, after his indictment. A competing lobbying firm, Nexsen Pruet, is still listed as representing the company's interests at the legislature.
The current four-year terms of the Board of Elections members expire April 30. A bill nearing approval at the General Assembly would bar anyone who has served three consecutive terms on the elections board from being reappointed. That would make both Leake and Winfree ineligible to serve again.
It will be up to McCrory to appoint their replacements, choosing from nominees selected by the Republican and Democratic parties.
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Weiss reported from Charlotte, N.C. Associated Press writer Gary D. Robertson in Raleigh also contributed to this report.