Texas Showdown

A few weeks ago, authorities under the instruction of Texas Attorney General John Cornyn raided the offices of MonetizeMedia.com, the operator of an Internet portal site, for alleged illegal promotion of gambling. Law enforcement seized all of the company's computers (including its server), its payroll account and numerous documents, leaving the company unable to operate. At this point, no charges have been filed.

Monetize officials have struck back by filing a lawsuit against the attorney general's office for violating their civil rights. The company has also taken measure to arrange for the return of items seized in the raid.

In two hearings before the state Supreme Court, Monetize has successfully obtained orders for the AG's office to return the seized items, however, the items have yet to be returned. According to the Houston Chronicle, government officials are facing contempt of court charges, with both Assistant Attorney General Reed Lockhoof and Sgt. Stephen Acker, the office's investigator, facing possible jail sentences for their refusing to obey the court's orders. The two are free on their own recognizance until another hearing next week that Attorney General Cornyn has been ordered to attend.

"We have significant evidence of illegal activity," maintains Mark Heckmann, a spokesman for the Attorney General. AG personnel strongly disagree with the ruling, saying that the Supreme Court did not rule on the merits of the case. The office has filed an appeal in the Court of Appeals, which it hopes will be heard next week. "We cannot act on it until it's cleared by the initial appellate stages," Heckmann added.

Monetize employees see the matter differently. "We genuinely did not do anything wrong," maintains company spokesman Don Beavers. If only the AG had called Monetize and talked about their concerns, Beavers lamented, everything could have been easily clarified. Instead, Beavers said, "Sergeant Acker filed a false affidavit," causing the near destruction of what the company says is a legally operating business.

The affidavit Acker filed to obtain the search warrant was an "absolute misrepresentation of facts," Beaver added. He points to a number of errors in the document that call in question both the investigator's intentions and abilities:

The affidavit said that a fence obstructs view of Beavers' home, making it necessary for officials to search it. Beavers, however, said there is no fence around his house, nor does any other home in his neighborhood. He added, "When I read that, I knew the guy (Sgt. Acker) was going to say anything he had to obtain the search warrant."
Further, the affidavit explains that "Bigtopcasino.com," a purported Internet casino, is hosted in three different states. "Everyone knows that's impossible," Beavers said. (Bigtopcasino.com is a doorway page Monetize uses to sell traffic to other sites.)
Officials were reportedly able to gamble on various e-casinos using money deposited from a credit card. Once again, Beavers refutes any connection, saying that the gambling incidents happened long before their company even was able to handle credit card transactions from customers spending $30 to place a listing on their portal.

Gaming attorney Anthony Cabot read the affidavit and was surprised by what he perceived as the investigator's apparent lack of Internet knowledge. "It's quite clear the investigator believed that the links were actually owned and operated by MonetizeMedia," Cabot said (presuming that Monetize indeed has no economic relationship with the gambling sites).

The entire situation has made one thing painfully clear to those at Monetize: "This gives them (the state) incredible power over what Texans can view on the Internet," Beavers told IGN.

Beavers says the raid has already cost the company dearly. Without their computers and server, employees were unable to work, leading to the layoff of half their staff. During the raid, more than 400,000 documents were taken, including tax returns for 400 people unrelated to the case, and the passwords to customers' free email accounts. Even the company's blank checks were seized, making it difficult to buy replacement items.

"We were scheduled to go public October 10," Beavers said. Thanks to the raid, they've lost millions of dollars that could have been raised in the IPO. Instead, Monetize officials are facing legal fees, court battles and a damaged reputation.

Perhaps Attorney General Cornyn and his associates feel that at least one part of their battle against illegal gambling has triumphed. After all, the company did have links to numerous gaming sites on their portal. Until the dust settles, however, it's hard to see what the AG has gained from the raid. The losses suffered by MonetizeMedia's officials, however, are readily apparent.

Even if the Attorney General agrees to return the seized items, it would take at least a thousand man hours to go through the documents first, according to Beavers, which adds up to about 50 weeks of work. In the meantime, it's unclear what case the Attorney General has been able to build against the company. Monetize claims to have no relationship with e-gaming sites and even goes as far as handling ad sales through a European marketing firm.

The scariest part of the whole mess, says Cabot, is that it could happen to anybody.

Supplemental Documents:

Affidavit
Restraining Order
Search Warrant