Feds Arrest Offshore Gambling CEO
Page 1 of 1
U.S. authorities moved against one of the world's largest Internet gambling operations Monday, charging 11 individuals and four corporations with various counts of racketeering, conspiracy and fraud.
BetonSports PLC, a U.K.-incorporated and publicly traded firm, was among the companies charged, along with its founder, Gary Kaplan, and its current chief executive officer, David Carruthers.
Public trading was suspended in BetonSports Tuesday after Carruthers was arrested and detained in Fort Worth, Tex.
The 49-year-old Carruthers was en route from England to Costa Rica, where BetonSports maintains extensive operations. Kaplan remains a fugitive from U.S. law in Costa Rica.
"Illegal commercial gambling across state and international borders is a crime," U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri said in a statement released late Monday afternoon.
"This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws."
In addition to the wide-ranging charges, the U.S. government is seeking forfeiture of $4.5 billion from Kaplan and his co-defendants.
The Department of Justice (DoJ) also filed a civil complaint to obtain an order requiring BetonSports to cease and desist taking sports wagers from the U.S. and to return money held in betting accounts to U.S. account holders.
The FBI is issuing letters to four U.S. telephone companies ordering them to stop providing service to any Internet sports books or online casinos operated by BetonSports.
"Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses," Hanaway said.
Under current federal law, the Wire Act, passed by Congress in the early 1960s, prohibits making gambling wagers over the telephone.
It is not legally clear if the Wire Act actually applies to the Internet, but the U.S. House of Representatives approved legislation last week to extend the Wire Act to all forms of Internet gambling.
Kaplan is charged with 20 felony violations of U.S. laws, including the Wire Act, Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy, interstate transportation of gambling paraphernalia, interference with the administration of Internal Revenue laws and tax evasion.
The indictment alleges that Kaplan and fellow co-defendant, Norman Steinberg, as the owners and operators of several online gambling operations took or caused their employees to take bets from undercover federal agents in St. Louis.
The indictment also claims Kaplan illegally arranged for equipment used to place bets and transmit wagering information to be shipped across state lines.
In addition, Kaplan is charged with arranging for Florida-based DME Global Marketing and Fulfillment to ship equipment to Costa Rica from Florida for BetonSports.com.
According to the DoJ, Kaplan launched his gambling business through a sports book in New York City in the early 1990s.
After he was arrested on New York gambling charges in 1993, Kaplan moved his operation to Florida and finally offshore to Costa Rica.