Grand jury may probe gambling

Fritz questions how much money charities received

Friday, May 9, 2008

The decision followed a court hearing attended by the prosecutor last Friday before a St. Mary’s judge, who granted a preliminary injunction barring police and prosecutors from seizing the machines at Fred’s Liquors in Charlotte Hall, and allowed play on them to resume.

State law generally requires nonprofit organizations to conduct their fundraising gaming activities, and Bob Sorrells, the store’s owner, testified that he is an active member of two charities that received proceeds from the machines, after his business deducted rent of $50 per day per each machine in the business.

He testified that his business netted $172,000 from the operation between last fall and the middle of March, when the machines were voluntarily turned off amid a police survey of the machines countywide.

‘‘It is my opinion that these charities are allowing themselves to be victimized,” State’s Attorney Richard Fritz said at his office in the courthouse, ‘‘by individuals who are scraping the cream off the top.

‘‘If they’re members [of charitable organizations], they’re not allowed proceeds from gambling,” Fritz said this week, ‘‘I don’t care if they call that rent, gratuities, thank-you money or anything else under the sun.”

Circuit Judge Karen Abrams issued an order this week further clarifying her ruling last Friday in the case, which said in part that the machines in the liquor store currently are legal under a 2001 appeals court ruling.

‘‘I stated early on that I thought these machines were legal,” Fritz said. ‘‘The judge bore me out on my opinion.”

The judge also wrote that the share of the proceeds received by the machines’ manufacturer and the rent collected by the premises ‘‘would need to be determined based on a reasonable business model,” and that Sorrells lawfully can operate the machines.

‘‘Although the machines may only be operated by members of charitable organizations, it would be anticipated that any event which is organized as a fundraiser would necessarily involve the assistance of volunteers donating their time and services to the organizations,” the judge wrote. ‘‘These volunteers would be considered members of the organization for the implementation of the event. The fact that Mr. Sorrells and his family members are also the landlords for the machines does not mean that they cannot also be volunteers and therefore a member of the organization, eligible to operate the machines.”

Fritz said his office obeys the law, including complying with injunctions, and also enforces the law.

‘‘As the judge says, she expects the sheriff and the state’s attorney not to take any actions that would be in contravention of the law,” Fritz said. ‘‘This office never takes any actions that are in contravention of the law, however, the testimony of various witnesses supports the proposition that many actions taken by the individuals prior to the court’s ruling raise the question as to whether their conduct comported to the requirements of the law.”

The judge wrote that Sorrells’ plan to resume using the machines would constitute more than an occasional event and would thus be considered ‘‘daily” use, which restricts an organization to using no more than five machines.

The prosecutor noted this week a state law requiring that the premises where a qualified organization operates a gaming device may not contain more than five of the devices.

Sorrells said this week that he would review the judge’s order before deciding how many of the 35 machines in his business can be plugged back in to resume operation. Restaurateur Bill Hill at St. Mary’s Landing in Charlotte Hall said earlier this week he expected to plug back in the five remaining machines in his business to benefit a parochial school, and a parochial school’s bingo games volunteer said it plans to resume using five machines at the nearby Brass Rail tavern in Great Mills.

The judge noted that any resumed use of the machines will end by July 1, when a legislative bill on the governor’s desk generally banning them would take affect. The judge’s order also allows for a further hearing on the merits of the case.

Testimony at last week’s hearing sought by Sorrells’ company indicated that machine manufacturer Impact Innovations in Nevada received 50 percent of the gross earnings.

The two nonprofit organizations, Center for Children Inc. in La Plata and Alternatives for Youth and Families Inc. in Charlotte Hall, each received about $30,000 during the months that the machines were in operation at the store.

Fritz said nonprofit organizations should be encouraged to pursue fundraising activities that do not ‘‘allow others to profiteer the lion’s share,” and that the charities could then have 100 percent of the proceeds.