BetonSports, the British-based online gambling company that ran afoul of U.S. authorities last summer, pleaded guilty today to federal racketeering charges.
The company admitted it conducted an illegal enterprise in the U.S. through a pattern of racketeering acts, including operating an illegal gambling business, repeated mail and wire fraud, money laundering and violating multiple state gambling statutes.
BetonSports faces a minimum fine of $500,000 and possible forfeitures. The company is also subject to a permanent injunction that requires it to repay money received from U.S. gamblers held by the company as of June 1, 2006.
In November, BetonSports settled a 22-count civil suit brought by the Department of Justice (DoJ) by agreeing to a permanent injunction barring the company from doing business in the United States.
“[Today’s] plea, combined with the terms of the civil injunction, should put an end to the BetonSports illegal gambling empire,” U.S. Attorney Catherine Hanaway said in a statement. “This plea constitutes a submission by the company to the U.S. justice system.”
As part of the plea deal, BetonSports agreed to supply witnesses and evidence against Gary Kaplan, the founder of the original online gambling business that eventually became BetonSports, and David Carruthers, the former CEO of the company who was arrested in Texas last July.
Kaplan, Carruthers and Norman Steinberg, another co-owner of BetonSports who remains a fugitive, are charged with running an illegal gambling operation in the U.S. They face various charges of racketeering, conspiracy fraud, money laundering and tax evasion.
“BetonSports PLC is presently the corporate parent, based in the United Kingdom, of the companies comprising the vast illegal Internet gambling operations described in the indictment,” Hanaway said. “BetonSports had been failing to appear and answer the criminal charges in the indictment.”
According to the DoJ, the forerunner of BetonSports was started by Kaplan in New York City in the early 1990s. After Kaplan’s 1993 arrest on New York gambling charges, he moved his operations to Florida, where he continued to take sports wagers from New York by telephone.
By 1995, Kaplan moved his gambling enterprise offshore to Aruba first, then Antigua and finally Costa Rica. In addition to establishing toll-free numbers for U.S. bettors, Kaplan began accepting sports wagers over the Internet.
Among Kaplan’s first computer-based sports book was one called the North American Sports Association International, which evolved into betonsports.com in 2004. Once BetonSports became a publicly traded company, Carruthers was brought in as the CEO.
BetonSports contends Kaplan had no active role in the company once he and Steinberg sold North American Sports Association International. After Carruthers’ arrest, Kaplan remained a fugitive until his March arrest in the Dominican Republic.
The DoJ claims BetonSports raked in $3.5 billion in online wagers from 2002 to 2004, with approximately 98 percent of the bets coming from the U.S. The DoJ contends American bettors did business with the company based on fraudulent advertising promoting the legality of BetonSports in the U.S.