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Company, owners guilty in Ohio Internet cafe case

Associated Press

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CLEVELAND: A New Jersey company that supplied software for so-called storefront sweepstakes parlors is ending its Ohio operations as part of a plea agreement related to gambling and money laundering, authorities said.

VS2 Worldwide Communications was fined $10,000 on charges of attempted racketeering and gambling, prosecutors said. A judge also ordered the company to forfeit more than $615,000.

Ohio Attorney General Mike DeWine said the company provided computers and software to places advertised as Internet cafes. But he said the business and its employees illegally marketed the games under state law.

“This plea agreement is a significant victory for law enforcement of Ohio gaming laws,” DeWine said in a statement Thursday.

But having the company stop operations was a moot point because a state law now effectively bans the cafes, VS2 lawyer Mark Schamel told The Plain Dealer in Cleveland.

That law went into effect a week ago. The industry once encompassed as many as 800 storefronts statewide.

The company’s owners, Phillip Cornick of New Jersey and Richard Upchurch of North Carolina, were each fined $1,000 and given suspended six-month jail sentences after pleading guilty to possession of criminal tools in connection with use of their products, according to prosecutors. More serious charges of racketeering and money laundering were dropped in exchange for their pleas.

“No one set out to break any laws in Ohio,” said Donald Malarcik, an attorney for VS2 and the two owners. “The legislature recently changed the law to prohibit this conduct.”

Mike Koty of New Jersey was fined $3,000 and given a suspended six-month sentence after pleading guilty to three counts of possessing criminal tools. He was service manager for another New Jersey company, P&E Technologies. That company was convicted on the same charges as VS2, plus a count of possessing criminal tools, and also was fined $10,000, prosecutors said.

Koty’s attorney, Gregory Robey, said his client worked for a “mom-and-pop” operation.

“The casino industry wanted them out of business,” he said.

Representatives of the casino industry in Ohio declined to comment Friday.

The judge had accepted the pleas Sept. 26, but initially sealed the terms.


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