Officials: Fla. lawyer at center of $300M scheme

AP News
Posted: Mar 14, 2013 6:05 PM
Officials: Fla. lawyer at center of $300M scheme

JACKSONVILLE, Fla. (AP) — One of the men who authorities say was at the center of a scam to use a veterans charity as a front for an illegal gambling operation that took in nearly $300 million was a well-known attorney who once ran a marathon in a suit as a publicity stunt.

Another man involved in the case was described by friends as a small-town "pool hustler" in South Carolina.

Jacksonville attorney Kelly Mathis was identified by authorities as the man at the center of the alleged racketeering scheme. Two other men charged as co-conspirators had experience running gaming parlors, including Johnny E. Duncan, who was charged more than 20 years ago with creating a fake charity to sponsor bingo gaming, which allowed the games to operate tax-free. The other man, Jerry Bass, had previously worked as general manager of a video poker parlor in South Carolina.

Authorities said Mathis made about $6 million from the operation. During a news conference Wednesday, Florida Attorney General Pam Bondi unveiled a poster with a photo of Mathis in the center and linked to dozens of alleged gambling operations. Officials said he was the registered agent for 112 businesses related to the investigation. Nearly 60 people have been arrested so far.

"Kelly Mathis ... appears to be the commonality of those who were arrested," Florida Department of Law Enforcement Commissioner Gerald Bailey said.

A lawyer for Mathis said during a bond hearing Thursday that his client did nothing illegal. Mathis' bond was set at $1 million.

"Mathis is not a ringleader," said lawyer Mitchell Stone, of Ponte Vedra Beach, Fla. "Mathis was a lawyer for organizations that were trying to legally conduct business. He was advising, he was litigating, he was counseling, doing things that attorneys do for clients. It's a pretty scary day in America if your lawyer is prosecuted for representing your interests."

Stone said Mathis is not guilty.

"There has been a rush to judgment," he said. "We need to take a step back and really analyze whether what he was litigating was legitimate. And I believe ... that what he was saying had absolute legitimacy."

The organization under investigation — Allied Veterans of the World — ran more than 40 Internet parlors offering computer slot machine-style games, investigators said.

Authorities said the organization's executives gave precious little to veterans and lavished millions on themselves, spending it on boats, real estate and Maseratis, Ferraris and Porsches.

The scandal led to the resignation of Lt. Gov. Jennifer Carroll, a Republican who once co-owned a public relations firm that worked for Allied Veterans. She has not been charged with any wrongdoing.

Meanwhile, news reports of the investigation sent shock waves through the Jacksonville legal community, where Mathis well-known.

Mathis, 49, is the past president of the Jacksonville Bar Association. Unlike membership in the state Bar, which is mandatory for lawyers, the Jacksonville group is voluntary.

A security guard turned away an Associated Press reporter at the entrance to the Jacksonville gated community where Mathis lives. The attorney's 7,890-square-foot home on Riding Club Road has five bedrooms and 4 1/2 baths. Duval County records showed Mathis bought it in September 2008 for $875,000.

It's unclear just when Mathis became involved with Allied.

Duncan was the former national commander for Allied Veterans of the World. He was being held without bail at a county jail in Spartanburg, S.C.

Robert Gillespie has known Johnny Duncan for years.

His daughter, Dana, has been married to Duncan's son, John Andrew Duncan, for more than 15 years and they have two children.

But the 71-year-old Gillespie said he first met Johnny Duncan in the 1960s — when Duncan had a reputation as a "pool hustler" in the town of Greer, S.C. Back then, Greer, a textile town, had a few pool halls, and Duncan was a fixture, Gillespie said.

"Everyone knew not to play him. He had the reputation as being pretty good. You know, you played him and you were sure to lose," he said.

Years later, when his daughter started dating Duncan's son in high school, he recognized the last name.

"I knew him right away," he said.

After high school, his daughter and Duncan's son went to Florida to join the family business. They were later married in Florida.

He said Duncan treated his family well and he was shocked when he heard that he had been arrested.

"Johnny Duncan is a good man," he said. "I can't believe all this crap about him. He's helped so many people over the years."

Duncan's brother, Donnie Duncan, insisted his brother did not break any laws.

"He took legal advice from (his attorney) Kelly Mathis. Kelly took care of everything — all the applications for the Internet cafes. Everything was done legally," Donnie Duncan told AP on Thursday.

He said his brother served in the Navy during the 1960s and created Allied to help veterans.

Johnny Duncan was arrested on gambling charges in 1987. He was charged with keeping a gambling house, sponsoring unlawful bingo games and failing to follow guidelines for games of chance in Leon County, Fla.

Duncan pleaded no contest to setting up a fake charity, called Army Navy Union, to sponsor bingo games in that county, the AP reported at the time.

He was sentenced to six months of probation and ordered not to operate bingo games in Florida.

"There is no evidence that any of the money collected was used for a charitable purpose," according to court records.

By 1989, the AP reported, Duncan was running South Carolina's largest bingo network, with 28 games. He was described as the commander of Army Navy Union, which sponsored the games. He also reportedly obtained national charters and state permits that allowed bingo games to operate as charitable activities, free from taxes.

According to the Tampa Bay Times, which reported on the Internet cafes in 2011, Duncan and Jerry Bass met around 1995, when Bass was the general manager of Slots of Fun, a 110-machine video poker parlor in Fort Mill, S.C.

Bass was also arrested. No one returned a telephone call to his home.

A telephone number listed for Allied Veterans was disconnected.

Duncan lives in Boiling Springs, S.C., a hardscrabble rural community just north of Spartanburg, S.C. Mobile homes, mill houses and strip malls line the two-lane road leading into the community of 8,000. Duncan bought his two-story brick home with a swimming pool for $286,000 in 2007.

"My brother is a very good guy. He is a very generous person. He'd take the shirt off his back for you," Donnie Duncan told The Associated Press.

Over the years, Allied has given millions away to charities, including $100,000 to North Carolina veterans groups in 2008.

He said his brother was just following the advice of Mathis.

"A lot falls back on the attorney. He said the laws — the way they were written — were legal and he could defend it in court. And that's why they started in that situation. "

"What little percentage that came into the management group that my brother was in charge of, he paid salaries out of that. They paid charities out of that."

"My brother paid every bit of state and federal taxes for the salary he drew."

"It's all about intent. His lawyer told him it was legal. His accountant doing his taxes told him it was legal. You're filing everything like you're supposed to and then all of a sudden, whammo. It's wrong."


Weiss reported from Spartanburg, S.C. AP writers Michael Schneider in Orlando, Fla.; Kyle Hightower in Sanford, Fla. and Tamara Lush in St. Petersburg, Fla., contributed to this report.