Lottery Commission likely to revoke Ferrell gambling licenses

Fifty years ago, wily West Virginia politicians used half-pints of whiskey to buy votes under the bi-partisan belief that “it ain’t wrong to pay a man to do right.” Later, a wealthy carpetbagger named Rockefeller spent millions of his own money to assure his niche in state politics, paying hundreds to “distribute campaign literature” and drive voters to the polls.
So why blame Massey Energy CEO Don Blankenship for legally spending $3 million to help elect political unknown Brent Benjamin to the state Supreme Court of Appeals in 2004? His self-serving goal was to reverse a 2002 Boone County verdict of $50 million against Massey by a circuit court jury that found the nation’s fourth largest coal company guilty of defrauding Hugh Caperton and Harman Mining Co.
It proved to be a wise business decision, validated when Justice Benjamin cast the deciding vote in a 2008 ruling to reverse that circuit court verdict and let Massey avoid paying damages that now stand at more than $82 million including interest.
Recently, by a narrow 5-4 verdict, the U. S. Supreme Court decided Benjamin must step aside because of potential bias and let another judge take his place to reconsider that decision. The high court’s ruling avoided a specific definition of what constitutes improper potential bias by a judge, reminiscent of a decision years ago on pornography when a member of the Supreme Court said simply: “I know it when I see it.”
Blankenship, who continues to emphasize that his desire to remove incumbent Justice Warren McGraw was the real motivation for his $3 million expenditure, could yet emerge a winner when the ruling is reconsidered. The only one of the five judges in the initial ruling that could participate this time is Justice Robin Davis. She wrote the original decision and is also expected to take Benjamin’s current position as temporary chief justice which means she would appoint Benjamin’s replacement.
The other three justices now are Menis Ketchum and Margaret Workman, both elected last November, and Tom McHugh, a former Supreme Court justice appointed earlier this year to fill the vacancy created by the death of Justice Joe Albright.
This latest development has added impetus to Gov. Joe Manchin’s plan to name an Independent Commission on Judicial Reform. He will appoint nine members that would be expected to make recommendations on changes in judicial elections by Nov. 15 although he has still not announced the names so far.
Modest efforts at election campaign reform in West Virginia were once again considered at the 2009 regular session of the Legislature, including a pilot program to publicly finance candidates in the 2012 Supreme Court election when two of the five seats will be up for re-election.
But Senate Finance Committee Chairman Walt Helmick, D-Pocahontas, pulled it off the committee agenda, claiming it would interfere with the governor’s plan for the overall study. So don’t expect any immediate reforms. A couple of states are giving publicly-financed campaigns a try. But most jurisdictions are reluctant to deny candidates capable of attracting large sums of campaign contributions the ability to collect and spend those funds.
MEANWHLE, critics of this state’s so-called “rainy day fund” that provides a cushion when tax revenues fail to meet expectations are often just as anxious as those who support the fund to take advantage of this handy financial cushion. And it is an efficient way to handle emergency financial needs.
Technically the name is “Revenue Shortfall Reserve Fund” and it originated 15 years ago. At first, the amount was only five percent of the annual budget figure until Gov. Manchin convinced lawmakers to double that amount to 10 percent three years ago. That same year, a second “rainy day fund” was created to be tapped only after the primary fund is exhausted.
On Jan. 1, 2009, the primary rainy day fund had a balance of $246 million and the separate “Part B” rainy day fund had a balance of $202.3 million. There is also a third reserve fund of $45 million as of Jan. 1, 2009 used to assure that state income tax refunds each year are paid in a timely fashion. And there is even a fourth separate reserve fund named the Tax Reduction And Federal Funding Increased Compliance (TRAFFIC) used to offset reductions in federal funding for state programs or other fiscal emergencies. That fund had a balance at the beginning of the year of $75.7 million.
The combined total in these four reserve accounts was $569 million at the beginning of 2009 and the most recent draw on those funds was $26 million approved at the recent special session to help some of the southern counties coping with serious flood damage this spring.
FINALLY, former House member Joe C. Ferrell of Logan County was a political embarrassment to his constituents when he failed to attend a single day of the 2006 legislative session but still accepted his full salary. Now his 48-count federal indictment on charges of bribery, racketeering and gambling is proving to be an embarrassment, as well as a substantial revenue loss to the West Virginia Lottery Commission.
Ferrell owns Southern Amusement Company in Logan, one of some three dozen companies licensed to lease limited video lottery machines to more than 1,650 retail locations around the state. His company currently has 675 licenses for limited video lottery machines that are located in more than 100 bars, clubs and other retail outlets. The Lottery Commission will probably revoke those licenses this week which would make the machines illegal until the licenses are issued to new applicants.

Lottery delays suspending Southern Amusement licenses
The West Virginia Lottery will wait to shut down 675 video lottery machines, despite a federal indictment against the Logan-based company that operates them.
By Alison Knezevich
Staff writer
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CHARLESTON, W.Va. -- The West Virginia Lottery will wait to shut down 675 video lottery machines, despite a federal indictment against the Logan-based company that operates them.

Lottery commissioners on Wednesday voted to delay suspending Southern Amusement Co.'s licenses, saying they feared the move would violate a federal judge's order to preserve the assets of owner and former state Delegate Joe C. Ferrell.

Lottery director John Musgrave and managing general counsel John Melton had recommended that the commission disable all of Southern Amusement's machines beginning July 17. That would give the 128 establishments with the company's machines 30 days to appeal.

"This is consistent with what we've done before," Melton told reporters before the meeting.

But after questioning Melton at length Wednesday, commissioners said they want the state Attorney General's Office to ask U.S. District Judge John Copenhaver whether suspending the licenses would violate his order. They hope to have an answer in time for the next monthly meeting, scheduled for July 22.

"None of us want this to languish, by any stretch of the imagination," Commissioner Michael Adams said.

But the judge's order makes the situation "unique," he said.

Copenhaver had ordered Ferrell's assets -- which include his real estate property, the company's stock, and every limited video lottery machine owned by him -- preserved so that federal authorities can seize them if he is convicted.

CHARLESTON, W.Va. -- The West Virginia Lottery will wait to shut down 675 video lottery machines, despite a federal indictment against the Logan-based company that operates them.

Lottery commissioners on Wednesday voted to delay suspending Southern Amusement Co.'s licenses, saying they feared the move would violate a federal judge's order to preserve the assets of owner and former state Delegate Joe C. Ferrell.

Lottery director John Musgrave and managing general counsel John Melton had recommended that the commission disable all of Southern Amusement's machines beginning July 17. That would give the 128 establishments with the company's machines 30 days to appeal.

"This is consistent with what we've done before," Melton told reporters before the meeting.

But after questioning Melton at length Wednesday, commissioners said they want the state Attorney General's Office to ask U.S. District Judge John Copenhaver whether suspending the licenses would violate his order. They hope to have an answer in time for the next monthly meeting, scheduled for July 22.

"None of us want this to languish, by any stretch of the imagination," Commissioner Michael Adams said.

But the judge's order makes the situation "unique," he said.

Copenhaver had ordered Ferrell's assets -- which include his real estate property, the company's stock, and every limited video lottery machine owned by him -- preserved so that federal authorities can seize them if he is convicted.

Earlier this month, Ferrell and his company were named in a 48-count federal indictment. They face racketeering, gambling, obstruction and bribery charges.

Authorities allege the Logan County Democrat ran illegal gambling rings in West Virginia and Kentucky, and that he bribed elected officials and a former state Lottery inspector.

Wendel Turner, a lawyer for Southern Amusement, told commissioners that shutting down the machines would violate Copenhaver's order because it would render the company essentially worthless.

Southern Amusement and its employees deny the accusations in the indictment, he said: "It's merely allegations, and at this point, nothing has been proven."

Turner also asked officials to consider the "innocent parties" that would be affected if they shut down the machines.

The company operates 7.5 percent of West Virginia's limited video lottery machines, the maximum allowed by law. Those generate $1.2 million a month in revenue for the state.

Combined, the 128 businesses that lease the machines would lose around $500,000 a month, according to the Lottery.

Ferrell bought Southern Amusement in 1995 from the family of state Senate President Earl Ray Tomblin, D-Logan.

Reach Alison Knezevich at alis...@wvgazette.com or 304-348-1240.
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3 Comments on "Lottery delays suspending Southern Amusement licenses "
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Posted By: sodbuster (11 hours ago)
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C'mon guys.

What did you expect when the State Gvt. sold out to the gambling lobby.?

This was predicted ahead of time, but the lust for this so-called easy money superceded common sense.

There will be more to come.

Posted By: endcorruptwv (21 hours ago)
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Bribes and kickbacks again, any coincidence Sothern Amusement used to be owned by Earl Ray Tomlbin? This is why Radio Frequency Identification chips are necessary for table games; to prevent human error and TEMPTATION! RFID chips are necessary for Jefferson County to vote for table games, among other amendments to correct the inequities in the legislation.

Posted By: steelercrazy (10:35am 06-17-2009)
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Dreams can come true,
Your connections will do!
Nice oversite, West Virginia Lottery.

Seriously, this is an embarrassment. Where is the freaking oversite, WV Lottery administration??? About 8% of the state's limited video lottery machines are about to be confiscated by the Feds, real nice!!!

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