Internet Betting Firm Charged With Conspiracy, Fraud
Updated: Tuesday, July 18, 2006 6:15 PM
Posted: Tuesday, July 18, 2006 12:52 PM
Federal officials charged 11 people, including the chief executive of an Internet gambling company, with conspiracy, racketeering, and fraud in taking sports bets from United States residents.
BetonSports and three other firms were also charged in the 22-count indictment, which was unsealed July 17 in St. Louis, Mo. A federal judge ordered BetonSports to stop accepting bets placed from within the U.S.
The company's chief executive, David Carruthers, and four other defendants were arrested over the weekend. The U.S. Department of Justice is seeking the forfeiture of $4.5 billion, cars, and computers from the defendants.
Several other defendants live outside the U.S., which will make them hard to apprehend, said U.S. Attorney Catherine Hanaway in St. Louis. "This is a tough crime to prosecute," she said.
Among those who live abroad is Gary Stephen Kaplan, the founder of BetonSports, which is incorporated in Great Britain and listed on the London stock exchange. Kaplan is a former New York-area bookie who moved his operations to the Caribbean after being arrested on gambling charges in New York in 1993, the Justice Department said.
Despite the move, the U.S. has remained Kaplan's main market, officials said. He now lives in Costa Rica and owns 15% of the company, according to the indictment. A warrant was issued for his arrest.
Officials said those arrested include Kaplan's brother, Neil Scott Kaplan, who handled purchasing for the company. He was arrested in Fort Pierce, Fla. Two other defendants were arrested in Miami and another in Philadelphia.
Carruthers was detained in Fort Worth while trying to make a connecting flight July 16 from Great Britain to Costa Rica. A federal magistrate ordered him held until a July 21 hearing.
Kevin Smith, a spokesman for BetonSports, said Carruthers and other company officials had no idea there was an indictment. "Certainly, had they told us, we would have been more than willing to negotiate with them and work on whatever these charges are," Smith said.
The other three companies named in the indictment handle promotional activity for BetonSports.
The indictment charges Kaplan with failing to pay excise taxes on more than $3.3 billion in U.S. wagers. Authorities also charged that Kaplan's group fraudulently claimed that Internet and telephone wagering on sporting events was legal and licensed.
The BetonSports Web site has a link to betting lines for horse racing, though most of the service is dedicated to sports and casino games such as poker.
Last week, the House of Representatives passed a bill that would make it illegal for American banks and credit card issuers to make payments to online gambling sites. The legislation must now be considered by the Senate.
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