Judge: York County officials acted improperly when seizing gambling machine

jmcfadden@heraldonline.comApril 13, 2013 

A Rock Hill convenience store owner won a victory earlier this month in his legal battle over a sweepstakes machine that was confiscated from his store more than a year ago.

A York County magistrate ruled that officers didn’t follow proper procedures after they seized the machine from Ira Max Craig’s store in December 2011 and charged him with operating a gaming house.

Judge Robert Davenport said officers did not immediately take the machines before a magistrate for a decision about whether the device was legal. The law required that step before Craig could be charged, Davenport ruled.

In his decision, Davenport overturned his previous ruling allowing officers to destroy the machine. Prosecutors haven’t decided yet whether they’ll appeal Davenport’s latest decision.

For now, the criminal charge against Craig is pending.

Craig’s case highlights the murky laws that used to apply to gaming machines in South Carolina. The laws established several criteria that law enforcement had to consider before someone could be convicted of operating illegal gambling machines.

The law was clarified last month when the Legislature passed, and Gov. Nikki Haley signed, a new law outlawing all sweepstakes machines in South Carolina.

But Craig’s case, and possibly others, lingers from the old rules. His attorney has argued that the machine was legal under the old rules.

On Dec. 13, 2011, two investigators with the York County Multijurisdictional Drug Enforcement Unit went to Craig’s Country C’s convenience store at 2090 McConnells Highway and found what a police report describes as an “illegal gaming machine” in a back room.

The investigators played the machine, inserting $5 into a slot and placing several bets in a traditional poker game of Jacks or Better. They walked away with a phone card and a receipt they turned into store clerks to collect their winnings, according to a court transcript from a criminal trial in August. They were secretly recording their activity on the machine.

A week later, county drug task force commander Marvin Brown and other investigators seized the machine from the store, loaded it onto a truck and locked it away in a climate-controlled warehouse after determining the machine was an illegal video poker game, according to court testimony.

In addition to prosecuting drug offenses, Brown’s task force also was responsible for tracking gaming machines in York County.

A month later, officials arrested and charged Craig with unlawfully possessing a gaming device and operating a game house. He was soon released from jail on a $2,000 personal recognizance bond.

Sweepstakes machines, which in recent years appeared in Internet cafes and parlors throughout the state, can take on a variety of forms, ranging from old-fashioned slot machines to computer terminals, Brown said.

The machine officials found in Craig’s store had slots on the front that accepted money, Brown said. Users put money in the machine to play poker, which made them illegal, he said.

If they won, they received cash in return, Brown said. If they lost, they’d have to put more money inside the slot to keep playing the game, he said.

Leland Greeley, Craig’s Rock Hill attorney, said the machine was legal at the time because users could purchase minutes for phone use as part of a promotional sweepstakes. Once they bought the phone time, they could play a game to earn credits that could be redeemed for cash.

State laws require law enforcement officers who seize alleged illegal gambling machines with plans to destroy them to take the machines before a magistrate “at once.” The magistrate is responsible for ruling if the machine is legal or illegal.

If the magistrate rules the machine illegal, he must sign an order of destruction. The owner of the machine then has 15 days to submit a request for a post-seizure hearing, where the owner can contest the magistrate’s decision and defend the machine’s legality.

That didn’t happen with Craig’s machine.

From December 2011 until August 2012, Craig’s machine was held by law enforcement without it ever appearing before a magistrate. York County solicitors in August then proceeded with the criminal case against Craig, until the trial was halted by 16th Circuit Court Judge John Hayes, who instructed prosecutors to follow through with the civil process first.

After Hayes’s decision, officials took the machine before Davenport, who issued an order to destroy the machine. Craig and his lawyer then submitted a request for a post-seizure hearing, which wasn’t scheduled until April, more than a year after Craig’s machine was taken.

During the hearing, Greeley asked that Davenport’s order be abandoned since the immediate post-seizure hearing was never held and the machine was instead placed in storage, where it was exposed to the “possibility” and “opportunity” for tampering and manipulation.

“We know for a fact things were done to the machine” to test its gaming capabilities, Greeley said. “The government intentionally decided not to bring it to a magistrate as the statute required.”

But local and state officials have argued that the civil route, which includes the post-seizure hearing, is one of two ways law enforcement can take when combating gaming machines.

When gambling machines are seized, there’s litigation in two separate courts— criminal and civil. Simply seizing the machine is “an action against property” and tried in civil court, said 16th Circuit Court Solicitor Kevin Brackett.

But the people who officials say put the machine in their stores or businesses can also face criminal charges, Brackett said. The machine is then considered evidence, or contraband, in criminal court, “just like a gun, mask and bag of money would be used as evidence in a bank robbery trial.”

In Craig’s case, York County officials proceeded with the criminal case first, which Judge Hayes determined should continue only after a magistrate made a legal decision about the machine.

“Civilly, it didn’t go before the magistrate as the civil statute reads but now we’re being told that has to be met” first, said 16th Circuit Court Assistant Solicitor Marina Hamilton, adding that, before, the state legislature was vague on providing prosecutors with instructions for handling gambling cases.

In court on April 3, Whitsett argued that prosecutors gave Craig his due process when the machine appeared before Davenport in August. He said the machine being held as evidence in a criminal trial “was a separate issue.”

Davenport disagreed. After reading aloud the state law requiring officials to take the machine in front of a magistrate “at once,” Davenport said drug agents should’ve taken the machine to a magistrate in December 2011.

He also stressed that the statute doesn’t specifically outline a procedural difference for a criminal or civil case.

“It says it shall be taken at once,” Davenport said, “not nine months later.

“I don’t think nine months is immediately.”

Heath Taylor, an attorney for the company that owns the machine, said, “the machine that was seized in August is not the same machine seized in December.” The delay in a hearing, he added, has prevented the company from “effectively defending the machine.”

“It’s clearly a due process violation because we cannot prove our case to you— it’s impossible,” he said.

Reached after the hearing, Whitsett said officials haven’t yet determined if they’ll appeal Davenport’s decision.

Criminal charges against Craig are still pending, but prosecutors will have to meet with Judge Hayes to determine how to next proceed with the case, said Hamilton, the assistant solicitor. She said the machine will continue to be held by law enforcement as evidence in Craig’s criminal trial.

Brown, commander of the county drug unit, said officials weren’t trying to circumvent the law when seizing Craig’s machine, but received instructions from the State Law Enforcement Division to seize the machines and then criminally prosecute the operators.

But SLED chief Mark Keel said that in cases handled by his agency, “we have the machines taken before a magistrate.

“That’s the way we’ve always done it. We’ve never done it any other way.”

Brown said after seizing the machine, agents asked a magistrate to sign an arrest warrant for Craig, figuring it would carry more weight than an order of destruction.

“We were mistaken,” he said.

Efforts to reach Craig were unsuccessful.

State pushback

For months, Craig’s legal battle played out amid a statewide law enforcement crackdown on similar sweepstakes machines.

After years of battling against a supposed legal loophole in the state’s beer and wine code that seemed to provide an exception to machines promoting contests and prizes, Gov. Nikki Haley last month signed a bill outlawing all sweepstakes machines, deeming them illegal gambling machines and eliminating questions about their perceived lawfulness.

But machines like Craig’s, adorned with posters that advertised prizes and a contest, were “the law” until Haley signed the bill, Greeley said.

“If someone had a beer and wine license, (the law) allowed them to promote products,” just like a restaurant chain that distributes chips to paying customers giving them the opportunity to get free food, he said.

The state Attorney General’s Office has for years said differently.

“The illegality of the machine does not change if there’s a sweepstakes there or not,” said Jared Libet, assistant attorney with the state Attorney General’s Office. “If it’s an illegal machine, it’s an illegal machine.”

“Our view is that South Carolina law is clear that illegal machines are banned as contraband,” Libet added. “Luckily, magistrates around the state are seeing through the industry's attempts to bring back video poker under the guise of a ‘sweepstakes’ and rejecting these arguments.”

The bill Haley signed validates what state attorneys have argued all along, Whitsett said.

In court, Greeley said Craig had no plans to reclaim the machine in light of what he says has only recently become law.

“Today, we agree that this appears to be an illegal machine,” he said.

The business owners who put sweepstakes machines in their stores aren’t bad people, Brown said. Instead, they’re trapped in the middle of a tug-of-war between law enforcement and the gaming industry.

When machines are seized and destroyed, gaming companies lose money, he said, but it’s the store owners, like Max Craig, who are arrested and criminally charged.

Because Judge Davenport vacated the order of destruction, an official ruling was never made as to whether Craig’s machine was legal or not.

Sweepstakes in York County

The battle between state law enforcement and the gaming industry has endured consistent seizures, orders and rulings by judges since the state Supreme Court outlawed gambling more than a decade ago.

SLED agents confiscated just over 1,100 sweepstakes machines last year and 505 so far this year, agency spokesman Thom Berry said. It’s unclear if any of the machines seized by the state this year have been in York County.

Jonthan McFadden •  803-329-4082

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