Va. firm admits slots scheme

It operated illegal machines at 3 Maryland truck stops for three years

May 09, 2007|By Matthew Dolan | Matthew Dolan,Sun reporter

A Virginia gambling company that knowingly operated illegal gambling machines at Maryland truck stops for almost three years agreed to pay a $2.5 million criminal settlement yesterday.

The company, Truck Stop Games, now known as FA&HU LLC, was at the center of an alleged multimillion-dollar gambling and money laundering operation, with 500 video betting machines in 110 locations in 15 states, including Maryland, according to law enforcement documents.

Yesterday's plea and sentencing in U.S. District Court in Baltimore called for the company - but not its individual officers - to plead guilty to money laundering and surrender corporate assets. In 2005, before filing any criminal charges, the federal government seized a private Cessna jet used by the company's president and $1.7 million from Truck Stop Games, owned by Horace K. Farrish of Virginia.

FOR THE RECORD - An article in the Maryland section yesterday about illegal slot machines in truck stops misidentified one of the locations. Federal agents raided a truck stop on O'Donnell Street in Southeast Baltimore operated by the Baltimore Travel Center. THE SUN REGRETS THE ERROR

In January, TravelCenters of America reached a separate $4.2 million civil settlement with the federal government for having the illegal slot machines at its truck stops, including several in Maryland, court papers show.

"I applaud the federal and state law enforcement officials for their successful investigation and prosecution of those involved in illegal gaming operations here," Maryland Comptroller Peter Franchot, whose office has aggressively pursued illegal gambling in the state, said in a statement last night. "The national gambling industry has its sights set on Maryland, but those of us who oppose slots and casinos will work tirelessly to keep them out."

The federal court hearing was unusual because it was scheduled as a simple initial appearance. But the company immediately entered a plea and was then sentenced, an unusually fast turnaround for a laborious process that could take months.

David G. Barger, a McLean, Va., attorney for Truck Stop Games, did not return a call for comment last night. No one answered a call placed to the home number in Virginia listed for Farrish, the company's owner.

At issue in the case was the illegal operation of amusement games in hundreds of corner bars and mom-and-pop convenience stores across the state that some watchdogs believe cheat Maryland out of $15 million annually in uncollected tax revenue and make illegal payments to players. Those findings were reported by Baltimore's Abell Foundation.

Issued in January 2006, the Abell report used court documents to describe an investigation tracing revenue laundered through several bank accounts, with some of the money spent to purchase the jet, which was used to move gambling machine parts and cash from state to state.

As part of a joint local-federal investigation, detectives in Maryland and Virginia played the machines and were paid their winnings. Agents raided three Maryland locations and confiscated 41 video gambling machines, including 15 from the Baltimore Travel Plaza on O'Donnell Street.

"They also seized records showing the income and payouts, as well as $17,015 in cash from the machines," the Abell report wrote. "Financial records seized from Truck Stop Games' office in Chester, Virginia, showed that revenue collections over a nine-month period for its multi-state operation totaled $6.3 million."

In court documents filed yesterday, the company admitted that it placed "a number of slot machines" in three truck stops operated by TravelCenters of America.

TravelCenters operates roadside stops at 163 locations, according to its Web site. A company representative did not return a call for comment yesterday.

"The slot machines were also known as redemption machines, because points won were redeemed for merchandise or food," prosecutors wrote in the plea agreement.

After payouts to players, the remaining cash was split so that 60 percent went to TravelCenters and the remaining 40 percent went to Truck Stop Games.

In mid-2002, Maryland authorities told TravelCenters officials at its Elkton location that the slot machines were illegal gambling devices under Maryland law and warned TravelCenters to remove them, court documents show.

The warning appeared to have been heeded, when Truck Stop Games removed its slot machines. But federal authorities later learned that in the fall of that year, TravelCenters threatened Truck Stop Games, saying that if it did not replace the machines in Elkton, it would risk losing its contract at other locations.

The company engaged in money laundering, according to court papers, when it wired proceeds from the slot machines in Maryland to its Virginia headquarters.

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