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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Fascination of SC, Inc.

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Fascination of SC, Inc.
 
DOCKET NUMBER:
98-ALJ-17-0658-CC

APPEARANCES:
For the Petitioner: Jeffrey M. Nelson, Esquire

For the Respondent: Randall S. Hiller, Esquire
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This is a case brought by the Respondent for a contested case hearing, pursuant to S.C. Code Ann. §§ 1-23-310, et seq., and 12-4-30 (Supp. 1998). Respondent has appealed an administrative citation issued by the South Carolina Department of Revenue (Department) against it for a violation of the South Carolina Video Game Machines Act (the Act). The Department issued an administrative citation and Final Agency Determination finding that the Respondent had violated the provisions of S. C. Code Ann. § 12-21-2748 (Supp. 1998) by failing to have identification of itself as the owner of two Class III video game machines. A hearing on this matter was held before me on March 3, 1999 at the Administrative Law Judge Division (Division or ALJD).

ISSUES

1. Did the Respondent violate the owner identification requirement of S.C. Code Ann. § 12-21-2748 (Supp. 1998) by failing to have identification properly posted on two Class III video game machines owned by and licensed to the Respondent?

2. If the Respondent did violate the statute, is the penalty of $5,000.00 imposed by the Department under S.C. Code Ann. § 12-21-2738 (Supp. 1998) appropriate?

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:

1. Notice of the time, date, place and subject matter of the hearing was timely given to the Petitioner and the Respondent.

2. Fascination of SC, Inc., (Fascinations) holds South Carolina Class III Coin Operated Device license numbers 3926762 and 3926763. Those licenses were attached to video machines operated in Rosco’s at 115 Pelham Road, Ste 14, Greenville, South Carolina.

3. On June 25, 1998, South Carolina Law Enforcement Division (SLED) Special Agent Jones of the SLED Alcohol Enforcement Unit conducted an inspection of Rosco’s. After checking the front, rear, and both sides of the Class III video game machines at this location, Agent Jones noted that two of the machines, bearing license numbers 3926762 and 3926763, did not have any owner identification attached to the machines. Agent Jones then asked the manager of the location to recheck the machines to see if he could find any owner identification. Agent Jones and the manager checked the front, rear, and both sides of the machines. Neither Agent Jones nor the manager could locate any owner identification on the machines.

4. Agent Jones prepared a Preliminary Findings Report citing the Respondent for violating Section 12-21-2748. On the basis of Agent Jones’s Preliminary Findings Report, the Department assessed a penalty against the Respondent in the amount of $5,000.00 under Section 12-21-2738.

5. A technician for the Respondent, Brian Mabry, testified that he prepared the machines in question before they were ever sent out from Fascinations. At that time, the machines had the owner identification attached to them. Additionally, Mr. Mabry checked the machines once a month to insure that the owner identification stickers were still attached to the machines. Furthermore, Mr. Mabry testified that after the Department cited Fascinations, he went to Rosco’s to inspect the two machines in question. At that time, proper owner identification was affixed to the machines. However, the extension between the machines had to be removed before those owner identification stickers were visible. Therefore, the owner identification was not "placed on an area of the machine[s] which [was] visible for inspection purposes." S. C. Code Ann. § 12-21-2748

6. Mr. Mabry also testified that Fascinations has started using owner identification stickers that are more difficult to peel off the machines. However, Fascinations is already experiencing problems with those owner identification stickers being removed. Fascinations is aware of the option of placing the owner identification under plexiglass, which would virtually eliminate the removal problem, but has not yet implemented that procedure or any other procedure that would provide assurance that the owner identification would not be removed.

7. I find that a penalty of $3,500.00 is appropriate in this case.

CONCLUSIONS OF LAW

Based on the above Findings of Fact, I conclude the following as a matter of law:

1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1998) and S.C. Code Ann. § 1-23-320 (Supp. 1998).

2. The Department contends that the Respondent violated S.C. Code Ann. § 12-21-2748 which provides that:

Any person who owns or operates devices described in §§ 12-21-2720 and 12-21-2730 must have attached to the machine information identifying the owner or operator of the machine. The identification must be placed on an area of the machine which is visible for inspection purposes. This identification is a condition precedent before the machines may be operated on location. Failure to comply with this requirement subjects the violator to the penalty and enforcement provisions of this chapter and of Chapter 54 as applicable.

3. The Video Games Machine Act which regulates video game machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. The Act is codified at S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1998). The express purpose of the Act is to regulate the video games machine industry in the State of South Carolina.

4. The Respondent in this case violated S.C. Code Ann. § 12-21-2748 on June 25, 1998, by not having proper owner identification affixed to two Class III video game machines it owned at Rosco’s.

5. The penalty to be imposed for a violation of § 12-21-2748 is provided for in S. C. Code Ann. § 12-21-2738 (Supp. 1998) which provides in relevant part:

If the violation under this section relates to a machine licensed pursuant to Section 12-21-2720(A)(3), the applicable penalty amount is two thousand five hundred dollars.

Under this statute, both the Department and the Administrative Law Judge Division may reduce the amount of the fine to be imposed under Section 12-21-2738 for a violation of Section 12-21-2748 provided that the party found in violation of Section 12-21-2748 can show some extenuating circumstance or "reason" for the violation.

6. On June 25, 1998, the Respondent violated S.C. Code Ann. § 12-21-2748. The Respondent had knowledge that its owner identification was either not visible or was subject to being lost or removed by patrons. Despite this knowledge, Respondent either intentionally or negligently failed to take action to reduce such alleged tampering or loss of identification from its machines until some time after the date of the violation at issue in this case. On the other hand, Fascinations is making an effort, albeit a limited one, to make it more difficult to peel the owner identification off of its machines. Furthermore, this violation involves two machines that had been tampered with that were adjoining one another. I therefore conclude as a matter of law that the Respondent violated the "owner identification" requirement of Section 12-21-2748 and that the appropriate penalty for such violation is $3,500.00 under Section 12-21-2738.

ORDER

Based upon the above Findings of Fact and Conclusions of Law, it is hereby:

ORDERED that the Respondent pay a fine in the amount of $3,500.00 to the Department of Revenue within thirty days from the date of this Order.

AND IT IS SO ORDERED.

 

_______________________________

Ralph K. Anderson, III

Administrative Law Judge

 

April 27, 1999

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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