What started as a joint federal and state probe into illegal gambling in Lexington County led to the indictment of Sheriff James Metts and three others, mostly for misconduct involving the custody of illegal immigrants.
It became clear in summer 2012 that former Lexington Town Councilman Danny Frazier – one of the three charged along with Metts – was advising the Internet sweepstakes industry on ways to set up shop in the Midlands.
Frazier’s advice to one person, secretly recorded and later given to news outlets, touched off a firestorm that lasted even after he apologized for “very poor judgment” and exaggeration. And it launched what is believed to be the early stages of the probe that’s still under way.
Now, many are wondering if the probe will come back, possibly with full force, to sweepstakes gambling.
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Some political leaders are astonished that the first indictments went beyond gambling.
“Something finally came of all the talk,” state Sen. Katrina Shealy of Red Bank said. “But what did is a big surprise.”
Political circles are still buzzing with what might come next.
“The rumor mill is so hot right now,” Lexington Mayor Steve MacDougall said.
Two of those indicted – former South Congaree Police Chief Jason Amodio and Frazier – are accused of misconduct related to video poker.
Amodio is charged with taking payments from Frazier in exchange for the return of gaming machines seized by town officers.
That clears the mystery of why FBI and SLED agents took equipment and other material in a May 1, 2012, raid on town hall in South Congaree, a community with leaders long friendly with Frazier. After the raid, Amodio was suspended and later resigned.
The investigation is continuing, according to the office of S.C. Attorney General Alan Wilson.
Frazier is cooperating with authorities, his attorney Jim Griffin has said.
Back and forth
The furor over gambling forced changes in how Metts policed Internet betting.
The 42-year veteran – South Carolina’s longest-serving sheriff before his suspension last week – became more aggressive in cracking down on the industry after first saying his deputies lacked expertise amid uncertainty if the games were permitted.
But when The State newspaper in August 2012 showed Metts a copy of a county magistrate’s ruling that seized gaming machines were illegal, he returned at least $4,500 in campaign contributions made by people and businesses with ties to sweepstakes gaming.
The probe eventually turned to what indictments say was “preferential treatment” that Metts allegedly gave in interfering with the identification and processing of illegal immigrants detained at the county jail, which he ran.
The incentive? Bribes allegedly paid to Metts in 2011 – sometimes relayed through Frazier – by restaurateur Greg Leon, according to the indictments.
Metts, through his lawyers, denies any impropriety and is fighting the accusations.
Frazier in 2012 was in the early stages of trying to become a political adviser when the fuss over his encouragement of the sweepstakes industry became public.
Many, not just Frazier, were pointing to a now-closed loophole in state law, arguing that the online sweepstakes gambling operations that were new to the state were legal – even though state officials said they weren’t.
Lexington County was one of the battlegrounds for the fight, which was being defined by magistrate judges’ decisions, case by case, as they ruled on one set of seized computers at a time.
Metts said he wanted a Lexington County magistrate, not state officials, to tell him the machines were contraband.
The State newspaper found a ruling by a Swansea magistrate that said just that.
Metts, meanwhile, had hired Frazier as a part-time consultant to relay community concerns to the sheriff. Frazier, whose relatives were in the video poker industry when it was legal in the late 1990s, served only a few months before being let go amid the furor over his gambling remarks.
Frazier has returned to his former career as a builder and developer.
But the scandal left a mark on Lexington County politics.
Frazier’s friendship with former Lexington Mayor Randy Halfacre – ties that ended in the outrage over gambling – was instrumental in Halfacre’s narrow defeat in his re-election bid last November, some town leaders say.
And earlier, the furor over Internet gambling was cited by political analysts as a factor in Shealy’s ouster of veteran Republican state Sen. Jake Knotts – an ally of gambling interests – in the 2012 elections.
“I don’t want their money,” Metts said when he gave back campaign donations tied to sweepstakes gaming. “I don’t need their money.”
But another politician who had accepted money from the same donors said he was not planning to return the cash.
Then-Sen. Knotts, R-Lexington, received at least $5,000 from individuals and companies with known interests in the Internet sweepstakes industry, according to his campaign finance reports.
Knotts said he would only return campaign donations if a business was involved completely in an illegal activity. But those businesses, he said, only earned a portion of their incomes from sweepstakes.
Among the donors were Larry W. and Kathy Flynn, a couple who owned the sweepstakes game Magic Minutes. They donated $1,000 each.
On June 11 – less than a week before the Lexington County indictments were made public – a federal grand jury indicted Larry Flynn. He was charged with operating an illegal gambling business and conspiracy to commit money laundering for his operation of Magic Minutes, according to U.S. Attorney Bill Nettles.
Flynn is a 39-year-old former Richland County deputy who spent 15 years as a special investigator for the 5th Circuit Solicitor’s Office. He lost a Republican primary bid to be Kershaw County sheriff in 2010, and in 2006, while a Columbia resident, lost a race to be the Republican nominee for S.C. secretary of state.
If convicted, he faces a maximum of 10 years in prison and a fine of up to $250,000.
In the past, Flynn and others argued that Magic Minutes devices simply allowed users to buy long-distance phone time and then offered them a chance, for free, to play video poker, slots and keno for chances to win cash.
In March 2013, Flynn was arrested by Spartanburg County sheriff's deputies and charged with possessing illegal gambling machines.
If there was a loophole in the state’s gambling laws – people continued to disagree – S.C. lawmakers closed it in June 2013.
Efforts to reach Flynn were unsuccessful.
As for Knotts, he said Saturday it’s unfair to continue to talk about sweepstakes and his past relationship with the industry. He said he also should be given some distance from last week’s indictments.
“I ain’t got nothing to do with that,” Knotts said. “I’m not in it. I hate it for Lexington County. ... There’s no secret I supported a person’s right to spend their money as they please.”
People should respect the fact that he’s no longer in politics and doesn’t plan to return, Knotts said.
“I’m 70 years old and enjoying life,” he said.
As for Lexington County residents and leaders, last week’s charges are generating a mix of relief, sorrow and anger after nearly two years of speculation.
“You’ve got some results, but you’ve got questions of what is yet to come,” said state Rep. Kenny Bingham, R-Cayce.