West Virginia: Crime and Corruption

UPDATE: Former WV Delegate Pleaded Guilty Thursday
Ex-Delegate Joe C. Ferrell must now quit the lottery business after pleading guilty Thursday to a pair of felony counts.

CHARLESTON, W.Va. (AP) -- A former West Virginia lawmaker admits he paid employees under the table and used his video lottery leasing company to run illegal gambling across state lines.

Ex-Delegate Joe C. Ferrell must now quit the lottery business after pleading guilty Thursday to a pair of felony counts.

While operating Southern Amusement, Ferrell said his video poker machines paid out illegally in Kentucky. He also admitted to bribing a West Virginia Lottery investigator as part of that racketeering charge.

Ferrell also pleaded guilty to failing to pay $38,000 in employee-related federal taxes owed in 2003.

The 63-year-old Democrat faces possible prison time at a Jan. 5 sentencing. He's already paid $600,000 as part of his plea deal, and must divest from Southern Amusement.



Ex-W.Va. lawmaker pleads guilty in gambling case
By LAWRENCE MESSINA - Associated Press Writer
CHARLESTON, W.Va. -- A former West Virginia lawmaker faces the loss of his video lottery leasing business and possible prison time after pleading guilty Thursday to paying employees under the table and running illegal gambling across state lines.

Ex-Delegate Joe C. Ferrell of Chapmanville also paid $602,000 as part of his plea agreement with federal prosecutors. It requires him to quit the lottery business and divest from Southern Amusement, which provides 639 video lottery terminals to 118 bars and clubs in the state.

Those terms should spare the company, one of lottery system's largest leasing outfits that was granted a renewed license last month. It was a co-defendant in the case, but prosecutors agreed to its dismissal and dropped efforts to seize its assets.


U.S. District Judge John T. Copenhaver Jr. set a Jan. 5 sentencing hearing for the 63-year-old Democrat, who represented Logan County in the House of Delegates for seven nonconsecutive terms between the 1980s and 2006.

With a bad ankle keeping him from standing during his guilty pleas, Ferrell admitted that his West Virginia business provided video poker machines that he said paid out illegally to a South Williamson, Ky., cigarette store between 2003 and 2008. He said he has since sold those devices. The business wasn't identified publicly in court.

As part of a racketeering count, Ferrell also said he bribed a West Virginia Lottery investigator with cash, meals and other gifts. Ferrell said he sought positive inspections from the investigator, a longtime acquaintance, and to ensure his machines could be serviced on weekends when lottery staffers are normally not available.

"She was wanting to buy a car one time, and I gave her the money or loaned her the money," Ferrell told Copenhaver. "She was always around to do favors for us."

The tax-related count said Ferrell failed to hand over $38,726 in employee-related federal taxes owed in 2003 from White Amusement, a subsidiary of his leasing company. The charges alleged Ferrell failed to relay tax proceeds in other years, and the $602,000 he paid included $75,000 owed to the U.S. Internal Revenue Service.

"I paid employees in cash, and I did not pay any taxes," Ferrell said.

A grand jury issued a new indictment in the case in August that reduced the number of charges from 51 to 40, and added employee Mark Anthony Cantrell as a co-defendant on nine counts. Those charges remain pending.

Copenhaver dismissed the 38 other counts against Ferrell, including mail fraud, obstruction of justice and bribery. The latter charges alleged Ferrell bribed voters, the sheriff-elect of Logan County in 2000 and the then-mayor of the city of Logan in the 1990s. Both those officials have since been convicted on other charges.

The Lottery investigator, Carolyn Kitchen of Chapmanville, resigned shortly before Ferrell and Southern Amusement were first indicted in June 2009. She has not been charged publicly.

Prosecutors also alleged that Ferrell used his elected office to benefit his company. His legislative tenure was interrupted by his conviction for illegal campaign spending in the 1990s. That case was supposed to bar Ferrell from future elected office, but its plea agreement proved unenforceable.