Veterans’ charity investigated for Internet cafe racketeering, company lawyer denies wrongdoing

May 6, 2013— — Gambling is one of America’s favorite pastimes. People who play slot machines or gamble at one of the thousands of online gambling websites help fuel an industry that brings in tens of billions of dollars every year.

But the dark world of gambling is not often associated with charity.

Allied Veterans of the World, a tax-exempt non-profit charity, appears to have been set up to help veterans in need.

But he’s currently caught up in one of the biggest gambling raids in US history. In March, state and local authorities arrested 57 people linked to Allied Veterans of the World, seizing slot machines and records from Allied Veterans of the World gaming centers across the state, as well as 80 vehicles and vessels, 170 properties and 260 estimated bank accounts. in the tens of millions of dollars.

The company is accused of housing illegal gaming stations in cafes outside stores. Along with accepting donations, investigators said the company raised $300 million over six years from profits from virtual slot machines, computer lotteries and other online games of chance.

The Five STAR Veterans Center, formerly called The Allied Veterans Center in Jacksonville, Florida, which houses 24 veterans with traumatic brain injuries after serving in Iraq, was funded with money from the Allied Veterans of the World.

The center’s CEO, Len Loving, is a grizzled former Navy colonel who runs the place. His wife Suzie Loving keeps the books. The couple had volunteered to come out of retirement to go into helping veterans. The center opened a year ago, but last month the Lovings said authorities had told them funding would run out by the end of next month as it was tied to play money illegal.

The center recently changed its name to disassociate itself from Allied veterans.

Here’s how authorities said the alleged scheme worked. Allied veterans operated internet cafes, which also allegedly served as gambling centers with illegal slot machines. But the charity maintains that it was not slot machines, but a legal computer contest. Prosecutors said the nonprofit laundered profits through for-profit companies, which sent bribes to the company’s four top executives.

Join the conversation: like “Nightline” on Facebook HERE and follow “Nightline” on Twitter HERE

Police allege the mastermind behind the operation is a Jacksonville attorney named Kelly Mathis.

“[Mathis] is the registered agent for virtually every aspect of this business,” Seminole County Sheriff Don Eslinger said. “He gave instructions, he was the face of the organization, and we think he was clearly the brains of it, and we can demonstrate that.

In an exclusive interview with “Nightline,” Mathis denied any wrongdoing.

“I am innocent of all the charges they brought against me,” he said. “I acted as an attorney representing these clients and representing their interests, just as I represent the interests of all my clients.”

Mathis, former president of the Jacksonville Bar Association and a pillar of the community, claimed he was not an Allied Veterans Society officer and the only money he made from them was from legal fees .

But Mathis proudly admits to spending months digging up a “sweepstakes” loophole that allowed the company and dozens of its affiliates to legally operate so-called gambling parlors in six states. Mathis said he believed his clients’ activities in the internet gambling industry were legal.

“When they came to me six or seven years ago, they asked me, ‘How can we organize a legal lottery operation?’ I told them I didn’t know, but I would research and find out,” he said.

“The second part of my job was to give them a legal opinion: does the law set a minimum [amount that had to be paid back to charity]”, Mathis added. “And it’s not.”

Thanks to this loophole, the Allied Veterans company would have earned $300 million as a non-profit organization and donated less than 2% of it to charity, according to authorities. Following the fallout from Allied veterans, the state of Florida last week banned such parlors with slot-type games.

When “Nightline” contacted former Allied “Commander” Johnny Duncan, one of 57 people arrested in connection with the gambling investigation, for comment, his lawyer said in the statement that gambling parlors were legal and vetted by “a team of 10 lawyers over six years.”

Duncan’s attorney went on to say that “Allied veterans have donated millions to veterans and other organizations” and were licensed to operate by the Florida Department of Agriculture, which oversees these charities. But Department of Agriculture officials told ‘Nightline’ they began investigating the company two years ago.

The Lovings said Allied Veterans gave the center $1.5 million from 2011 to 2012. Allied Veterans also gave an additional $700,000 to various East Coast Veterans Administration facilities from 2004 to 2011. , according to a spokesperson for the Veterans Administration. But investigators said the charity only accounted for a fraction of the nonprofit’s revenue.

Despite the allegations, Mathis defended the actions of Allied veterans.

“I don’t know how much money the Allied veterans invested in creating this center [in Jacksonville]”, he said. “I was told that it is well over a million dollars that they put in – if they had not engaged in this activity which would not exist at all.”

Prior to the survey, Allied Veterans of the World had a reputation for success and had future Florida Lieutenant Governor Jennifer Carroll acting as a paid pitchwoman. She even appeared in their advertisements.

After the arrest, Carroll resigned as lieutenant governor but denies any complicity in the alleged scheme. In a statement to “Nightline,” she claims the company “tricked” her into thinking it was legit and that she had no “knowledge of their internal or financial operations.”

But now veterans groups fear the Allied Veterans scandal and subsequent arrests could scare away donors from legitimate veterans charities. While the Allied Veterans of the World were the Allied Veterans Center’s biggest benefactor, Len Loving said the center continues to operate with the support of other local military and civilian charities.

“We’re trying to find a way to break with [Allied Veterans] divest as quickly as possible,” he said. “But we don’t know what will happen to us.

Comments are closed.