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West Texas gambling business owner pleads guilty in federal court

James Lynn Jones operated Lot-O-Games in Jones County, Texas

LUBBOCK, Texas — A west Texas man who operated a gambling business for nearly two years pleaded guilty Thursday in federal court to an Information charging one count of operating an illegal gambling business, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

James Lynn Jones, 69, of Abilene, Texas, operated the illegal gambling business, Lot-O-Games, on Highway 277 in Jones County, Texas.

The maximum statutory penalty for the offense is five years in federal prison and a $250,000 fine. However, according to the plea agreement filed in the case, the government will make a non-binding recommendation to the court that the appropriate sentence is eight months imprisonment, to be satisfied by two months imprisonment and a term of supervised release with a condition that substitutes six months of home detention for the remaining term of imprisonment. U.S. District Judge Sam R. Cummings ordered a pre-sentence investigation report with a sentencing date to be set after the report is completed.

In addition, according to the plea agreement, Jones agreed to forfeit property that was seized by law enforcement officers last summer, pursuant to federal search and seizure warrants. The following items include the forfeited property: $414,163 in cash, $12,337 in cashier's checks, gold coins, two vehicles, jewelry, firearms, ammunition, numerous gaming machines, surveillance equipment and computer equipment.

According to the factual resume filed in the case, U.S. Immigrations and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) received information that Jones was operating an illegal gambling business. HSI special agents, acting in an undercover capacity, entered the business and observed 25 to 30 customers playing on various gaming terminals. The special agents approached a Lot-O-Games employee and told her they wanted to play on terminals 21 and 22, a slot-machine-type game and a video poker game. One special agent handed the Lot-O-Games employee $50 in cash and the employee credited terminal 21 with 5,000 credits. The other special agent applied $65 worth of credits (6,500 credits) from a prior undercover operation to terminal 22.

Soon thereafter, the special agents observed James Lynn Jones, carrying a brown paper bag, enter the business and walk to a bar area across from the cashier's counter where he pulled out two stacks of cash. Immediately after Jones arrived, several patrons exchanged certificates for small pieces of paper at the Lot-O-Games cashier's counter. The patrons then took that piece of paper to Jones who, in turn, exchanged the small piece of paper for cash. About 20 to 25 minutes after the special agents arrived, they observed the Lot-O-Games employee approach a patron who had won a 120,000-point jackpot. The employee told the patron that she would remove the 120,000 point credit from the machine and allow the patron to cash out the $1,200 in cash with Jones. The special agents then saw the patron go to Jones to receive the cash.

One special agent concluded playing the video poker game with 4,900 credits, approached the Lot-O-Games employee and handed her a $1 bill. The employee, in return, gave the agent five, $10 "playback certificates." The employee told the special agent that he/she could get cash because the owner was present and that Sundays were the only days that the business paid out in cash. The Lot-O-Games employee took back the playback certificates and gave the special agent a small piece of paper with the number "5" and her initials on it. The agent handed the piece of paper to Jones, who, in turn, gave the special agent $50 in cash. The other special agent followed a similar procedure to obtain $50 in cash from Jones.

The investigation revealed that this was standard practice at Lot-O-Games. During the week, customers received Playback Certificates for the points that were remaining after playing at various gambling-type video game consoles. On Sunday, Jones came to Lot-O-Games and customers could exchange these playback certificates for cash. This practice began sometime around late 2010. The investigation further revealed that during a 12-hour shift, the business took in about $3,500 to $5,000.

This investigation is being conducted by the following agencies: HSI, the Abilene Police Department, the Jones County District Attorney's Office, the Office of the Texas Attorney General and the Texas Department of Public Safety.

Assistant U.S. Attorney Jeffrey Haag, of the U.S. Attorney's Office in Lubbock, Texas, is in charge of the prosecution; Assistant U.S. Attorney Diane Kozub is handling the forfeiture portion.