Media and industry attention will be focused on the happenings in
Judge Carol E. Jackson's courtroom in the Eastern District of Missouri
on Monday, where a hearing is scheduled on a temporary injunction
that currently prevents BetonSports from taking U.S. business. The
injunction was granted on July 18 to federal authorities and extended
late last week to Monday in order to allow service of documents on
the UK public company.
But huge interest will also be directed at another court hearing in
the same district, where an arraignment hearing is scheduled in which
charges will be put to those accused that the feds have been able
to apprehend so far regarding a Grand Jury indictment listing 22 accusations
against 11 defendants with connections to BetonSports.
In particular the recently dismissed CEO, David Carruthers' case will
be watched. He remains in custody and by then will have been transferred
to St. Louis from Texas where he was arrested whilst in transit at
Dallas-Fort Worth airport on July 16 (see previous InfoPowa reports).
He and his defense team are hoping to secure his release on bail,
which has thus far been opposed by the authorities, citing "flight
risk."
The present directorate and management of BetonSports, a UK public
company, has reportedly been in Costa Rica over the past week trying
to negotiate a way out of the company's predicament but has now returned
to Britain according to Associated Press reports. In compliance with
the US injunction, the company has closed its US facing website to
business at a reported cost of $4 million a day.
The legal actions surfaced earlier this month with a series of arrests,
including Carruthers, of individuals with employment or other connections
to BetonSports. A sealed Missouri grand jury indictment dating back
to early June was used as the platform for the arrests and alleges
that 11 individuals are involved on 22 counts that allege money laundering,
tax evasion, racketeering, fraud and other offences. The US government
is seeking the forfeiture of $4.5 billion, cars and computers from
the defendants.
Among those accused is the founder of BetonSports, a colourful ex-New
York bookie named Gary Kaplan who is still at large but is urgently
sought by the US authorities.
Over the weekend, Associated Press reported that the action was not
thought to be a nationwide blitz on online gambling. The AP report
says that the case is not part of a coordinated federal crackdown
on the industry, and quotes DoJ spokesperson Jackie Lesch who says
that the Department pursues cases that have the strongest evidence
and greatest potential for deterrence.
The news service said that attorneys at the Justice Department headquarters
have been involved from the outset in the investigation by the US
Attorney's office in St. Louis of BetOnSports PLC.
One of the chief government figures involved in the case, U.S. attorney
for the Eastern District of Missouri, Catherine L. Hanaway, said her
office has a history of bringing cases against Internet gambling firms
and companies that carry advertisements for them, including Paypal,
the Discovery Channel and the Sporting News.
"Those cases have resulted in multimillion dollar civil
enforcements," Hanaway said. Her office has been pursuing
Internet gambling cases since 1998 and its "investigative
and prosecutorial resources have great expertise" in that
area, she added.
The BetOnSports investigation started long before Hanaway became U.S.
attorney last July and the Justice Department lawyers in Washington
had been involved from the beginning, she said, noting that an attorney
from Justice's organized crime and racketeering section is working
on the case.
When asked if the case was part of a larger, coordinated Justice Department
effort, Hanaway said she could not comment on ongoing investigations.
BetonSport's shares, which are quoted on the London Stock Exchange,
were suspended on July 18 at the company's request. In a shock announcement
some days after Carruthers was arrested the Board dismissed the executive
from both management and the directorate in a move that has been interpreted
as an attempt to distance the now troubled company from the issues
surrounding the indictment.
In other news: BetTheDuck "Agents" arrested
In another US federal investigation this week federal officials from
the IRS and the US Attorney's office detained eight individuals on
allegations of conducting an illegal gambling business, which carries
a maximum sentence of five years in prison and a $250 000 fine, and
conspiracy to launder money, which carries a maximum 20-year sentence
and a $500 000 fine.
Those arrested were: Ray Vargas of Fremont; Jenaro R. Mejias, also
known as Bob Mejias, of Carson City, Nev.; Tony Ferretti and Dallas
Affolter, both of Pacifica; Houshand "Hoosh" Pourmohamad
of Richmond; Ed Attanasio of San Francisco; David Volkman of Belmont;
and Norm Foisy of Lafayette.
U.S. Attorney Kevin Ryan said the charges accuse the defendants of
acting as "agents" for Bet The Duck.com, an online gambling
site based in Costa Rica. He said the charges will claim that the
men collected cash or cheque wagers from players in the United States,
then gave the money to "runners" who delivered the funds
to the gambling business.
The agents received a commission based on the percentage of the players'
losses, he claimed.