Florida Lt. Gov. Resigns Amid Nonprofit Investigation
March 14, 2013 Zach Halper
Florida Lieutenant Governor Jennifer Carroll has resigned from her post amid a wide-ranging criminal investigation of a nonprofit with which she was once associated.
Carroll was interviewed Monday by law enforcement officials about her connections to Allied Veterans of the World, a Jacksonville, Fla.-based nonprofit that allegedly operates a chain of illegal Internet cafes, according to a report in The Miami Herald. While it was not clear that she was a subject of any criminal investigation, Carroll nevertheless announced her resignation in a two-sentence letter to Gov. Rick Scott on Tuesday, which he accepted.
Scott’s chief of staff, Adam Hollingsworth, said in a statement that Carroll resigned in an effort to keep her former affiliations with the company from distracting from the administration’s important work on behalf of Florida families.” He acknowledged that she did “consulting” work for Allied Veterans of the World in 2009 and 2010 while a member of the Florida House of Representatives. The Miami Herald also reported that Scott’s office claimed that Carroll ended her affiliation with Allied Veterans in 2011.
Carroll first rose to prominence when she was elected to the Florida House of Representatives in 2003. She was the first African-American Republican woman to be elected to that position, and she was selected as then-candidate Scott’s running mate in September 2010.
Allied Veterans has had a big role in Florida, especially in connection with the Scott administration. It spent has spent thousands of dollars on state lobbyists and contributed $25,000 for Scott’s inaugural ball. Carroll herself introduced legislation in 2010 that would legalize all electronic sweepstakes games, but later withdrew the legislation claiming that it was not meant to be filed.
A call to Allied Veterans for comment was met with a disconnected number message, and an e-mail to the organization was not immediately returned.
Carroll’s resignation comes amid a flurry of activity surrounding the investigation of Allied Veterans. On Monday, leaders from the organization were arrested on allegations of racketeering and money laundering. The president of the Jacksonville Fraternal Order of Police (FOP) union, Nelson Cuba, and its vice president, Robbie Freitas, were also arrested.
The charges revolve around a series of Internet cafes that the organization allegedly runs, which allow customers to win money through electronic gambling. Some of these games are legal in Florida, so long as a majority of the proceeds go to charities. However, state Attorney General Pam Bondi and federal investigators allege that the organization attempted to defraud public and governmental agencies by misrepresenting how much of its game-related revenue went to charities.
“It is shameful that Allied Veterans of the World allegedly attempted to use the guise of a charitable organization to help veterans in order to lend credibility to this $300 million illegal gambling scheme,” Bondi said via a statement.
During an afternoon press conference announcing the charges, state investigators alleged that only 2 percent of Allied Veterans’ proceeds went to charities. The four alleged co-conspirators in the case were attorney Kelly Mathis, attorney for Allied Veterans, organization chairman Jerry Bass, Johnny Duncan, and Chase Burns. Mathis was described by investigators as being the alleged “mastermind” behind the alleged scheme.
In all, the accused allegedly received $90 million from the Internet cafes.
Investigators said during the press conference that Cuba and Freitas allegedly created a “shell company” to hide the money he and Freitas were receiving from three of the sweepstakes centers, which they also co-owned. It was alleged that at least one of these centers distributed a third of the proceeds to the FOP foundation, in order to protect Allied Veterans.
FOP issued a statement Tuesday, before the charges were officially announced, stating that Cuba and Freitas’ arrest had nothing to do with the organization “but appears to be a result of their personal business relationships with Allied Veterans.” The organization is in the process of selecting an interim president.
In a separate statement, Florida FOP president Jim Preston said he was “shocked” and “concerned” about the arrest, and reiterated that they were unrelated to FOP business. “As a law enforcement organization, we firmly believe in the justice system that we all work in,” Preston said. “We also believe in the innocent until proven guilty concept. Until the investigation and court process determines otherwise, these individuals deserve the full protections afforded anyone who stands accused of a crime.”
Allied Veterans of the World was founded in 1989 with the expressed purpose of, according to its website, contributing “time, money and support services to veterans and first-responder organizations across the country.” The site identifies the nonprofit as a registered 501(c)-19 organization.
According to the organization’s 2011 federal Form 990 filings, Allied Veterans made $1.73 million after bringing in nearly $2.5 billion the previous year. Almost $1.71 million of that 2011 revenue came from investment income, with the other $26,929 coming from grants and contributions.