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Magistrate says Magic Machines illegal

Posted: March 6, 2012 4:25 p.m.
Updated: March 7, 2012 5:00 a.m.

Around 11 a.m. Jan. 26, Sgt. Jamey Jones, an investigator with the Kershaw County Sheriff’s Office (KCSO), walked into the C&M Market on U.S. 1 South near Elgin. Working undercover, he sat down at one of two video machines marked “Magic Minutes,” fed a marked $20 bill into the machine “and numerous card games came up,” he wrote in a report.

As Jones played one of the poker games, he heard the store’s phone ring and the female clerk pick up. He heard the woman say “the Magic Minutes machine” and saw her look over at him. That clerk then spoke with another female employee who came over to Jones’ machine and ripped off a piece of paper sticking out of it.

“Why did you do that? I wasn’t finished playing,” Jones said.

The second clerk told Jones to call a particular phone number; he asked her again why she tore the piece of paper -- listing his phone minutes -- out of the machine. After not receiving a straight answer, Jones revealed himself to be a KCSO investigator and what he was doing there: responding to a complaint of illegal video gambling machines at the store.

A S.C. Law Enforcement Division (SLED) agent and other KCSO deputies then entered the store. The SLED agent declared the Magic Minutes machines illegal and had the deputies open both machines. They collected a total of more than $1,000. Three $100 bills were included in the cash. In the report, Jones said the SLED agent said it was hard to believe someone was using such large bills just to buy phone minutes.

Deputies seized the machines and obtained an order from Kershaw County Magistrate Judge Bill Corbett for their destruction.

But the machines were not destroyed.

Magic Minutes owner L.W. Flynn, a former 5th Circuit Court assistant solicitor who ran for Kershaw County sheriff in 2010, contested the seizure. Corbett heard the case Monday. After six hours, he ruled that the machine Jones played was, indeed, illegal, in violation of the state’s ban on video gambling machines.

Kershaw County Sheriff Jim Matthews, who beat Flynn in a summer 2010 primary, said he was certain that would be the outcome while attending the hearing.

“I felt sure, from listening to the testimony from both sides, there was no way a judge who is as impartial as they should be, could rule in favor of the defense,” Matthews said in his office Tuesday morning.

Matthews said Corbett only ruled on one of the machines his deputies seized.

“The defense claimed that one of the machines was counterfeit, so the hearing was on only the one machine,” Matthews explained.

During the hearing, Flynn’s attorneys, Joshua Kendrick and Lir Derieg, argued two major points: first, that the machine was legal because playing the games was voluntary, tied to the purchase of long-distance telephone minutes; and, second, that four magistrates had already deemed such machines legal.

The Magic Minutes website includes links to four copies of rulings from magistrates in four different counties -- including Kershaw County Chief Magistrate Rick Todd.

In his Aug. 2, 2011, ruling, Todd concluded that the Magic Minutes vending machine he examined did not violate state law and should not be destroyed. The ruling details how Magic Minutes machines work and continually refers to what Matthews considers video gambling as a “sweepstakes game” that can be played for “free.” Those sweepstakes games may include “poker, blackjack and keno,” according to Todd’s ruling. If they win the game, it says, the customer may receive his cash winnings from the store in which the machine is located.

The other favorable magistrate rulings were handed down in Richland, Darlington and Florence counties.

Matthews said the Magic Minutes machines are merely redressed Pot O’Gold machines from South Carolina’s video gambling days.

“They’re poker machines, but they try to make them look legitimate because they’re really buying phone minutes,” Matthews said.

The difference, he said, is that there can be a cash payout for winning the poker, keno or blackjack games on the machines.

“If I put $10 in, I’ll get $10 worth of phone minutes and the opportunity to play these games of chance. They’re trying to legitimize it by tying it to a ‘product,’ but it’s the same lights and noise -- it sucks you in -- it’s an attractive thing,” Matthew said

On the Magic Minutes website, the company criticizes Matthews’ decision to go after the machines.

“Do we still have some good ole boys alive in SC that believe they make the laws?” the website asks. “Certainly sounds like enforcing court rulings and judge’s orders is not the way some law enforcement officials view their job description! Apparently some law enforcement officials believe they have the authority to superceed (sic) our courts. How scary is that!”

Matthews sees that part of the situation as he and his deputies simply doing their job.

“People have been asking me if we’ve got better things to do than busting video machines. My answer is yes, but that when we get a complaint, we go after it. Until it becomes legal, if it ever does, we will continue to go after it,” Matthews said. “We will devote the necessary assets to get the job done and then move on.”

At the same time, Matthew is not shying away from calling out those supporting the effort to bring video gambling back to South Carolina. In his opinion, there is some influence peddling going on. Matthews notes the names involved. Flynn; one of his attorneys, Derieg, who is a former 5th Circuit assistant solicitor; and while not involved in Flynn’s case, Reggie Lloyd, a former Kershaw County councilman, former U.S. Attorney and former SLED chief.

According to the Georgetown (S.C.) Times, Lloyd is representing Texas-based HEST Technologies, manufacturer of another set of “sweepstakes” machines. The Times reported that the city of Georgetown recently enacted a moratorium on issuing new business licenses to owners planning on installing such machines in their businesses. The paper said Lloyd believes the games are like Publisher’s Clearinghouse mailers.

“Big money goes after attorneys. How much bigger a name can you get than Reggie Lloyd? I suspect they are paying these people big money,” Matthews said, adding that he believes a former assistant U.S. attorney is also representing video gambling interests. “Somebody’s got to do it, so they’re going to hire the best they can afford. I guess these names give them even more credibility.”

Magic Minutes’ website also responds to Matthews’ allegations.

“So, if SC judges follow the law, then it’s called influence peddling? Wow! Seems like a state agency telling other agencies that Magic Minutes is illegal, when all of the court rulings say otherwise, is closer (to) influence peddling,” the website said.

In a telephone interview Tuesday afternoon, Flynn said he is trying to be as tactful as possible.

“It is what it is. He’s not going to recognize court opinion and, personally, I think that’s wrong. It’s very much outside the scope of his job,” he said.

Flynn said he started the business at the end of 2010.

“I’m the only one selling long-distance; in my opinion, I’m the only legitimate company. Until all these other video poker people started getting their stuff on the street -- when that happened, people made it look like that’s when they discovered us,” Flynn said, adding that he had not only advertised the business, but tried to work with law enforcement. “We tried to meet with law enforcement all over the state. I respect them. I spent my entire adult life in law enforcement.”

Flynn said he is trying to make the distinction about why his company and his machines are different.

“If they were going after real criminals -- maybe they think we’re the gateway to such activity. I don’t take it personally; I know they’re doing their job. But we’re just another start-up company. We shouldn’t be compared to the past, especially a past we were never a part of,” Flynn said.

Derieg said it was “tough” to figure out exactly what happened in the courtroom Monday.

“The judge didn’t give much of an explanation. We’ll have to wait to see what the issues are in his formal order,” Derieg said. “We’ve gotten conflicting orders in the same county where the chief magistrate thought the same type of machine is legal.”

When asked if Todd examined the machine in August while it was powered up and operating normally, Derieg would only say Todd “looked” at the machine.

“I can’t tell you more than that,” he said.

Derieg and Flynn said the company has received a lot of support through phone calls, emails, text messages and blog posts. And, they said, they will appeal Monday’s ruling.

“The next step is to try and clear up any of the confusion. Even (current) SLED Chief (Mark) Keel said it is confusing. I think it’s a good thing for both sides and we look forward to arguing that case in circuit court,” Derieg said.

Derieg said Magic Minutes has two other cases pending, one each in Charleston and Spartanburg counties. He said neither case has been scheduled for a date before a judge.

Flynn said he felt the circuit court would be the “perfect arena” to hear the case.

“Now we’ll get confirmation that what we’re doing is lawful and that we’re not doing anything wrong,” Flynn said. “We’re not trying to break any laws or trying to disrupt law enforcement. We’re just a company trying to do business and I think people are going to see that. We need more jobs; people aren’t employed and we don’t need to be putting anyone out of business.”

In the wake of Corbett’s ruling, Matthews said the Magic Minutes machine his deputies confiscated is staying put at KCSO headquarters.

“We’ll be holding on to it,” Matthews said. “I’ve also talked to my deputies. I asked them if they know where other machines are. They said yes, so I told them to go get them.”

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