Racing Services founder Susan Bala and vice president Raymundo Diaz pleaded not guilty in U.S. District court Thursday to charges of conspiracy to conduct an illegal gambling business and money laundering.
According to the defendant's attorneys, not guilty pleas were entered after a plea bargain offered by the U.S. Attorney's office was rejected. Mark Beauchene, who is representing Bala and Racing Services, said there was no interest in a deal because the charges are "ill-conceived" and have "neither a legal or factual basis.
"Despite the North Dakota U.S. Attorney's overtures to plea bargain, we have no interest in compromising the integrity of the reputations of the company and representatives," Beauchene said. "Rather, the proper venue is in court where the facts can be presented to a fair and impartial court or jury."
A total of 12 counts were filed against Bala and Diaz, including an allegation a company owned by Diaz, Global Contact Inc., was illegally used to process over $99 million in wagers and pay out over $12 million in rebates, although it was not licensed by the state.
The trial has been set for Feb. 12. A motion to dismiss accompanied the defendants' not guilty plea but a hearing on the motion was not scheduled.
The indictment followed a months-long investigation by federal prosecutors. Racing Services was placed under investigation by state and federal officials after it was discovered the company owed $6.5 million in gaming taxes. A court-appointed receiver was put in place to manage Racing Services during the investigation and Bala was subsequently removed from day-to-day operations at the request of the state Attorney General.
In a prepared statement, Bala said any accounting errors by Racing Services were clearly identified by the company and disclosed to authorities as soon as they were known.
"These deficiencies were an administrative lapse," said Bala, who remains the company's sole shareholder. "Repeated efforts were made by RSI to negotiate a payment schedule to resolve the matter. What happened may be negligent but it was not criminal."
According to Racing Services, about $1.5 million in back taxes have been paid since the shortfall was first revealed.