The United States Attorney’s Office for the Middle District of Pennsylvania, announced that Pennsylvania Coin, LLC, a Scranton-based company, pleaded guilty yesterday in U.S. District Court to a charge of conspiracy to commit money laundering. The guilty plea was entered before U.S. District Court Judge Malachy E. Mannion.
Attorneys representing the company put into the record a corporate resolution signed by the members of the corporation, setting out the terms of the plea agreement with the government. The terms include:
- Entry of a plea of guilty;
- Forfeiture of $77,866 and 288 gambling devices to the government;
- Payment of restitution in the amount of $1,050,000 to the U.S. Treasury and payment of $300,000 to the Pennsylvania State Police.
According to United States Attorney Peter Smith and as presented to the Court by Assistant U.S. Attorney Wayne P. Samuelson, the company was charged in a one-count criminal Information filed on October 22, 2014 with conspiracy to commit money laundering between January 2007 and October 2012.
The company maintained and operated approximately 288 video gambling machines throughout Lackawanna, Susquehanna, Wayne and Wyoming Counties. The machines were placed in establishments, including bars, restaurants and clubs. The Pennsylvania State Police (PSP) began an investigation in 2007. PSP undercover agents visited those establishments and placed controlled bets and received payouts from establishment owners, and/or observed patrons receiving payouts after playing the video gaming machines. Agents also observed over 100 machines with switches used to erase accumulated credits from the game played, an indication that the machines were being used for unlawful gambling and not solely for amusement.
The IRS joined the investigation in 2012. Surveillance revealed that supplies of illegal gambling devices were stored in warehouses owned by the defendant.
In October 2012 search warrants were executed by the IRS at three business locations of the company. The Pennsylvania State Police-Bureau of Liquor Control Enforcement searched approximately 180 bars and other non-liquor licensed establishments and seized 288 illegal gambling machines. U.S. currency totaling $77,866.15 was also seized.
Further investigation revealed that the defendant split with the site or establishment owners (approximately 100) the proceeds of the money generated by patrons of the establishments playing the illegal video games. The defendant maintained an account at a financial institution, and comingled the illegal funds with funds generated by the defendant’s legitimate business income-producing machines, such as pool tables and juke boxes. The comingled funds were used to pay employees who collected funds from the site owners and employees who maintained the video gambling devices in working order. A review of the defendant’s bank account showed approximately $1,700,000 was deposited as proceeds from the split of the illegal gambling funds. The co-mingling of the illegal gambling funds through a bank account constituted the violation of the federal money laundering statute.
A plea agreement containing the terms set out in the corporate resolution was filed at the same time the criminal Information was filed.
No sentencing date has been scheduled.
Assistant United States Attorney Wayne P. Samuelson prosecuted the case.