Video Gambling Business Owner Pleads to Tax Evasion

Magic Minutes Video Gambling Business Owner Pleads Guilty to Tax Evasion Charges

federal tax evasionThe owner of Magic Minutes, a notorious video gambling house, has officially pleaded guilty in federal court to tax evasion charges.

Although Larry W. Flynn, 40 years old, spent years insisting to police that his machines operated on phone cards and therefore did not break any state gambling laws, he repeatedly had 200 video poker machines seized. However, on Tuesday, August 25th, Flynn officially pleaded guilty to charges of tax evasion in federal court.

“On the machines owned by Flynn – as well as others who paid to utilize the name Magic Minutes – users could buy a ‘voucher’ for phone minutes and then play blackjack, keno, poker, and other games of chance,” in violation of S.C. law, U.S. attorney Bill Nettles said in announcing the plea deal after Flynn pleaded guilty.

Nettles said that between 2010 and 2013, Flynn generated a huge amount of income from video gambling machines and actively took steps as a business owner to avoid paying taxes on the money.  Flynn allegedly paid employees in cash, did not file tax returns in 2011 or 2012, and purchased most business and personal items or services like plastic surgery, drugs, and entertainment, in cash from the machines, so there was little to no trail for the IRS to follow.

At the time that Flynn set up his business, the video gambling machines were not illegal.  That changed with a new law in 2013, which closed a loophole for “sweepstakes” machines in the state’s rigorous video poker criminal law. South Carolina officially made video gambling illegal in 2000, but a loophole for machines that offered prizes besides cash allowed several business owners to continue running successful gambling businesses. Whether the machines violated the law was up to a local magistrate after police seized the machines. If the business owner asked the magistrate to find that the machines were not illegal gambling devices, sometimes the magistrate would agree and the businesses could continue.

Flynn was arrested after the passage of the law and criminally charged for the video gambling machines in his establishment. His tax evasion charges were part of a larger federal investigation that also recently took down several officials on public corruption charges, including former Lexington County Sheriff James Metts.

Flynn will be sentenced at a later date, but he could face up to 10 years in federal prison, and a $350,000 fine for his tax evasion charges.



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