EAST TEXAS — The State of Texas has launched an investigation into a problem that KETK first told you about in July.

The investigation centers around a company, Hest Technologies Inc., and what they call "sweepstakes machines", which the state government says qualify as illegal gambling machines.

KETK looked into the legality of the machines, last month.

CLICK HERE TO SEE KETK'S REPORT.

According to The Lufkin Daily News, on Wednesday, August 22, several video gambling machines are being confiscated from Lufkin area convenience stores. The paper reports, at least three stores are involved.

Here is more information on the investigation, from the Texas Attorney General's office:

On Friday, August 17th, state investigators arrested senior executives with Haltom City-based HEST Technologies Inc. during a joint operation led by the Texas Attorney General’s Office, the Anderson County Criminal District Attorney’s Office and the Tarrant County Criminal District Attorney’s Office.

Federal and local law enforcement agencies also executed search warrants at HEST’s headquarters and at the residences of five executives and the operator of an alleged charitable organization.

The defendants face felony gambling, money laundering and organized criminal activity charges.

The Texas Attorney General’s Office will prosecute the cases in conjunction with the Tarrant and the Anderson County Criminal District Attorney’s Offices. Assistant Attorney General David Glickler will serve as the lead prosecutor for the State.

In addition to the Texas Attorney General’s Office and the Tarrant and Anderson County Criminal District Attorney’s Offices, the following agencies have participated in the HEST investigation:

• Tarrant County Sheriff’s Office
• Dallas Police Department
• U.S. Secret Service
• FBI’s Dallas and Tyler offices
• Internal Revenue Service’s office in Dallas

Assistance was also provided by the California Department of Justice, the Massachusetts Attorney General’s Office, the Massachusetts State Police and the Virginia Commonwealth Attorney’s Office in Virginia Beach.

HEST’s promotional materials claim the corporation develops “sweepstakes promotional systems.”

According to the felony charges filed against the defendants, however, HEST’s so-called “sweepstakes” systems constitute illegal gambling devices. As a result, the defendants face organized criminal activity charges for conspiring to violate state laws that prohibit gambling.

Assistant Attorney General Glickler, who is coordinating the multi-jurisdictional investigation, has successfully prosecuted video sweepstakes operations for gambling violations in the past. According to AAG Glickler, video sweepstakes promoters often attempt to circumvent anti-gambling laws by claiming to sell a lawful service – such as time at an Internet café – that is used to induce gamblers to participate in an illegal electronic sweepstakes. Earlier this month, the U.S. Court of Appeals for the Fifth Circuit rejected two video sweepstakes promoters’ legal argument, finding: “…the main purpose of [the defendants’] Internet cafés was to induce people to play the sweepstakes, and that the Internet time sold by the cafés…was not the primary subject of the transaction, but instead mere subterfuge."