A word of advice for elected officials: If the veterans charity you're working with owns a string of Internet cafés which specialize in cash-prize "sweepstakes," you might want to steer clear. And not introduce legislation on their behalf.
That lesson comes too late for Florida Lt. Governor Jennifer Carroll, who resigned her position yesterday in a terse letter sent to Governor Rick Scott. Carroll, the first black woman elected to the state House of Representatives as a Republican, joined Scott's gubernatorial campaign in 2010.
Between her retirement from the Navy in 1999 and her election in 2003, Carroll founded a public relations firm, 3N. & J.C., that represented, among others, a non-profit organization called Allied Veterans of the World. Unlike most non-profits, Allied Veterans ran over three dozen Internet cafés around the state. At least some of the cafés featured sweepstakes competitions, in which players reserved computer time, then checking a number on the machine to see if they'd won. A 2011 report by TCPalm.com focused on criticism that the game was a poorly masked form of gambling, a claim rebutted by Allied Veterans representative Jerry Bass, who likened the game to McDonald's contests. TCPalm's report also indicated that at least one of the cafés brought in $100,000 a week.
Surveillance footage from an attempted robbery at an Allied Veterans café in 2012
That's a lot of money for veteran's services — or it would be if it had gone to veterans. A joint investigation by the IRS and the Secret Service indicated that, of the $290 million Allied Veterans brought in between 2007 and 2001, only about 2 percent went to charitable services. Yesterday, the Feds swept in, arresting the president of the St. Augustine Fraternal Order of Police — and Allied Veterans' Jerry Bass, who earned over $100,000 a year as head of the organization. The Florida Times-Union outlines the charges:
Investigators said the centers transferred money to Allied Management, a wholly owned subsidiary of Allied Veterans. The subsidiary then moved the money through other entities and used it for improper purchases, including buying property for former president Johnny Duncan.
Although federal law prohibits individuals from unreasonably benefiting from charities, the warrant application says Duncan received more than $1.5 million and Bass more than $250,000 from the organization. Both men also used money to purchase condos, commercial buildings and homes, including two parcels in St. Augustine.
Carroll's work with Allied Veterans didn't end when she was elected to the Florida House. A statement released by the governor's office yesterday indicates that "Carroll consulted for Allied Veterans while serving as a member of the Florida House of Representatives in 2009 and 2010"; last year, the office insisted that her relationship with the organization ended in 2011. In 2010, however, Carroll was faulted for introducing legislation that would have made explicitly legal Allied Veterans' sweepstakes.
Carroll introduced HB 1185 in February of this year, just before the start of the legislative session. It was withdrawn days later at the urging of party leaders who were concerned Carroll had an obvious conflict of interest. The legislation would have legalized the sweepstakes industry, setting up guidelines and requiring independent analysis of machines used in the games. An early version included a provision specifically excluding charitable nonprofit organizations from regulation — exactly what Allied Veterans of the World, Inc., purports to be.
On Monday, Carroll met with law enforcement officials investigating Allied Veterans. The next day, she tendered her resignation, writing:
Effective immediately, I hereby resign the Office of Lieutenant Governor of the State of Florida. It has been an honor to have served the State of Florida in this capacity.