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Gambling probe nets Net café, operators

County files counts of money laundering; 4 are charged in case

– Four months after state gaming agents raided a local Internet café, the business’s owners and some employees are charged with running a professional gambling racket and money laundering.

In late December, Indiana Gaming Commission agents raided Lincoln Plaza Internet Sensations in New Haven and Wrigley Field Bar and Grill, removing 51 machines after two undercover investigations.

On Friday, Allen County prosecutors charged Fort Wayne residents Edward G. Miers, 26, of the 2600 block of Kingston Place, and Matthew Rae, 28, of the 6300 block of Kiwanis Drive, with corrupt business influence, promoting professional gambling, professional gambling, and money laundering. The two men operated Lincoln Plaza Internet Sensations, according to court documents.

The money laundering charge alleges they acquired, received, possessed or transferred the proceeds of the illegal professional gambling operation, according to court documents.

Prosecutors also charged Florida resident Stephen W. Carnes, 48, with the same counts. Court documents identify Carnes as the managing member of Buckwheat Holdings LLC and Lincoln Plaza Internet Sensations, which share the same address on file with the Indiana secretary of state.

The two companies are also charged with professional gambling and promoting professional gambling. Charging the companies allows the state, if it obtains a conviction, to collect a fine from them, Allen County Chief Deputy Prosecutor Michael McAlexander said.

A fourth man, 36-year-old Jared Hochstedler, of the 700 block of Misty Court, is charged with professional gambling and money laundering.

According to court documents, Lincoln Plaza Internet Sensations sold Internet “air time” for $5 an hour. For each hour they bought, customers received five free “sweepstakes” credits, which could then be used to place bets on “Vegas-style games” accessed from Lincoln Plaza Internet Sensations computers.

Winners received $1 a winning credit, according to court documents.

Gaming agents conducted undercover investigations at the Internet café and at Wrigley Field Bar and Grill – where similar machines were placed.

The machines were all owned, according to court documents, by Carnes, but were installed at Wrigley Field Bar and Grill and other bars by Hochstedler and Rae.

In September, the state’s Alcohol and Tobacco Commission issued a notice declaring the “sweepstakes machines” to be “electronic gaming devices,” according to court documents.

Another memo was issued Dec. 19, saying “sweepstakes machines” popping up in bars, restaurants, convenience stores and other premises that sold alcohol were prohibited, even for businesses authorized to have pull tab-type games.

State officials said at the time of the raids that Internet sweepstakes machines can quickly become a problem and have become prevalent in states such as Ohio, North Carolina and Florida.

But those who run such cafés say the machines are analogous to McDonald restaurants’ “Monopoly” game, where customers buy food, get a ticket and have a chance to win.

“Simply put, the sweepstakes machines are our Monopoly game and the Internet or phone time is our cheeseburger. This makes it legal,” said court documents quoting a website selling sweepstakes machines.

Since the December raid, attorneys representing Buckwheat Holdings sued in Marion Superior Court, seeking a determination against the Indiana Alcohol and Tobacco Commission that the machines are not electronic gaming devices.

According to court documents, a Marion Superior Court judge ruled against Buckwheat Holdings, saying that the customers are paying for gambling games regardless of whether they receive Internet time with their purchase.

In January, Buckwheat Holdings’ attorneys sued in U.S. District Court in Fort Wayne, asking a judge to find the gaming agents’ reliance on the state’s gaming laws as misguided, and to declare the seizure of the machines a violation of the company’s constitutional rights.

That case is pending, with attorneys for the state of Indiana asking for a delay to allow the issues to be decided in a state court, according to federal court records.

In January 2011, Edward G. Miers’ father, Edward R. Miers, received a sentence of probation for his role in an illegal charity gaming operation – the Parnell Poker Palace. Edward Miers was originally charged with a felony charge of professional gambling.

Edward R. Miers and Carnes have another business together – using the same 160 East Lake Brantley Drive, Longwood, Fla., address as Buckwheat Holdings and Lincoln Plaza Internet Sensations. That one, called Kryptos, offers an application for BlackBerry, iPhone and Android smartphones that purports to offer encrypted voice services, according to the company’s website.

On his own website, Carnes, in a photograph posing in front of an FBI building, said he is president and CEO of Kryptos Communications.