$48 million profit generated from VS2 gaming system
Strongsville Post Editor
Law enforcement agencies in Cuyahoga County are cracking down on those involved with illegal Internet sweepstakes cafes. Cuyahoga County Prosecutor Bill Mason, the Ohio Investigative Unit of the Ohio Department of Public Safety, the Parma Heights Police Department, the Ohio Attorney General's Office, the Bureau of Criminal Investigation and Identification, U.S. Secret Service, U.S. Marshal Service and U.S. Postal Inspector's Office announced the indictment of 10 defendants and seven companies involved in illegal Internet sweepstakes cafes in the county.
Ten individuals and seven companies operating, or working in close cooperation with the owners of an intricate Internet gambling system, were named in an indictment. The counts included engaging in in a pattern of corrupt activity, a first degree felony; conspiracy, a second degree felony; gambling, a misdemeanor of the first degree; gambling, a fifth degree felony; operating a gambling house, a fifth degree felony; and money laundering, a third degree felony.
The system is known as "VS2" that is controlled by a computer server in the New Jersey headquarters of VSW Worldwide Communications, LLC.
The principal operators and account holders of the VS2 gaming system were identified as Phillip Cornick, Edward Kaba and Richard Upchurch. These individuals perpetuated the expansion of the VS2 gaming system in Ohio during the past four years.
Ohio-based distributors and markers of the system George Georgekopoulos, 37, of Hinckley, Pete Georgekopoulos, Christos Karasarides, and Christopher Maggiore, assisted them. These individuals convinced many small business owners in Cuyahoga County that the VS2 Internet caf © gaming system operates as "sweepstakes," which are not illegal and unregulated in Ohio.
The distributors and marketers of the VS2 gaming system also benefitted from the assistance of local opportunists. Martin, 61, of North Royalton and Neil Sarcyk, owners of Union Vending, which already had a significant number of Cuyahoga County's bars and restaurants as existing customers for their vending machines, jukeboxes and arcade games, acquired many VS2 gaming system terminals from VS2 Worldwide Communications, LLC and VS2's partner company, P&E Technologies, Inc. The Sarcyk's, through their business, Union Vending, convinced several of their clients to add the VS2 gaming system terminals to their bars and restaurants.
VS2's expansion practices indicate how determined they were to control the Internet sweepstakes cafe business wherever it went, according to Maria Russo, spokeswoman for Mason.
When the owner of Good Times Charlies II in Parma Heights rejected suggestions that she get rid of her restaurant/bar altogether and dramatically expand her number of VS2 gaming terminals, another local opportunist, James Watson, opened the Sweepnet Internet Cafe © just a few business storefronts away. Unlike the majority of the cafes in Cuyahoga County, Sweepnet never registered with the Secretary of State, meaning it does not pay state taxes and is not a legal entity that can be held accountable in any way, except by Parma Heights.
The Ohio Investigative Unit and the U.S. Secret Service, with records acquired by the Cuyahoga County Prosecutor's Office, identified numerous company and individual bank accounts being used to "launder" the vast amounts of cash being generated by the network. The revenue is funneled to New Jersey to VS2 Worldwide Communications, LLC in the form of checks and money orders from the individual caf © owners, which collect cash from its local collaborators.
Since February 2008, VS2 has profited over $48 million from illegal gambling, according to Russo. This represents only 25 percent of the proceeds from the illegal Internet gambling caf ©s in Cuyahoga County.
"We are working hard with partners like Prosecutor Mason to crack down on illegal Internet cafes in Ohio," said Attorney General Michael DeWine. "These businesses, hundreds across Ohio, are totally unregulated and can be a real consumer rip-off."
The city of Strongsville is one community that drafted legislation three years ago to keep Internet cafes from doing business within its borders.
"The safety director, police chief and myself took a very strong position with respect to the Internet sweepstakes cafes," said Strongsville Law Director Kenneth Kraus. "I wrote a legal opinion at that time against a lot of pressures that were brought to bear on us in respect to different applicants ... Our position here has been vindicated by virtue of what's happened in Cleveland and what's happening now in Cuyahoga County."
Since the city drafted legislation keeping Internet cafes out Kraus has received numerous communications from fellow law directors within Cuyahoga County.
"I've received calls from other law directors who have said to me, 'We really regret letting them in. Now we think they're illegal. What can we do?'" he said.
The Cuyahoga County Prosecutor's Office sent cease and desist letters to 51 businesses (66 individuals) to discontinue use of the VS2 gaming systems.
Mason said, "The end result is exactly what the members of the criminal enterprise intended - a complicated and elaborate, layered web of related companies dispersing and distributing money to each other with hopes of never being caught. The days of gambling with the law have come to a screeching halt."