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File | The Journal Gazette

Probation for betting-device owner

New Haven business forfeits 51 computers used in sweepstakes

With a guilty plea in a criminal case, sweepstakes machines have been identified by their owner as electronic gambling devices, illegal under Indiana law.

Late Monday morning, Stephen W. Carnes, 48, of Florida, pleaded guilty in Allen Superior Court to a single charge of professional gambling, a Class D felony. He was sentenced to a year on probation.

But as the representative for the company, Lincoln Plaza Internet Sensations, LLC, Carnes entered a guilty plea to the Class D felony charge of promoting professional gambling. Along with the guilty plea, the company, through Carnes, will pay a $10,000 fine and forfeit its interest in the 51 computers seized in the investigation.

The computers will be donated to area charities: The Fort Wayne Boys and Girls Club, the Boy Scouts of Allen County (Anthony Wayne Council) and the local chapter of the Girl Scouts, according to court documents.

In making guilty pleas in the two cases, Carnes admitted in court documents that the sweepstakes entries sold at the now-defunct New Haven business were part of an electronic gambling operation.

In April, Allen County prosecutors charged Carnes with corrupt business influence, promoting professional gambling, professional gambling and money laundering.

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

Along with Lincoln Plaza Internet Sensations, LLC, Carnes’ other company, Buckwheat Holdings LLC, was also charged. In exchange for his guilty plea, charges against Buckwheat Holdings were dismissed Monday.

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.

A year ago, state officials identified the sweepstakes machines as “electronic gaming devices” and they were prohibited even in 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 Ohio, North Carolina and Florida.

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

Since the raid, attorneys representing Buckwheat Holdings and Lincoln Plaza Internet Sensations sued the state of Indiana in both the U.S. District Court in Fort Wayne and Marion Superior Court in Indianapolis – in both cases asking a judge to rule 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 the customers are paying for gambling games regardless of whether they receive Internet time with their purchase.

In March, attorneys for the state of Indiana asked the federal judge not to weigh in on the case until Buckwheat Holdings had a chance to raise its issues in state court.

Carnes’ admissions in the criminal case will be included in the federal civil case, said Joby Jerrells, the director of license control for the Indiana Gaming Commission.

The Lincoln Plaza case was the first time sweepstakes machines had appeared in Indiana, and the prosecution and guilty plea sends a message to others who would think of locating such operations here, Jerrells said.

“Indiana is not a viable venue for illegal gambling operations,” he said.

The criminal cases against the other individuals are still pending.

Regarding the 51 seized computers, court documents indicate they will be divided up equally among the three non-profit organizations.

Joe Jordan, executive director of the Fort Wayne Boys and Girls Club, said he had not heard of the possibility of obtaining some of the computers.

But he said he would welcome them.

“We could make those computers work for the good,” he said.