New York authorities issued a 33-count indictment today charging 27 individuals and three corporations with operating an illegal online gambling operation that allegedly booked more than $3.3 billion in wagers over a 28-month period.
In addition to the criminal charges, Queens County District Attorney Richard A. Brown is pursuing a $500 million asset forfeiture case against 20 of the defendants.
New York City Police Commissioner Raymond W. Kelly characterized the operation in a statement as the “largest illegal gambling operation we have ever encountered.”
While the gambling ring’s servers were located on the Caribbean island of St. Maarten and beyond the reach of U.S. laws, much of the operation was run from the New York area and Miami.
Among those indicted are the Web site’s designer, Primary Development of Farmingdale, N.Y., and its CEO Maurice Freeman. Also charged is the site’s security provider, Prolexic Technologies of Hollywood, Fla.
In addition, Digital Solutions, S.A., a company incorporated under the laws of Costa Rica, and its American counterpart, D.S. Networks, S.A., are charged with providing the site with its servers, data and software.
“The case… marks the first time that a Web designer and an offshore-based Internet company have been charged with directly participating in a criminal enterprise,” Brown said in a statement.
According to the indictment, the 30 defendants conspired to acquire money illegally through the operation of an unlawful gambling enterprise involving the use of an Internet Web site.
The charges include enterprise corruption, conspiracy, grand larceny, money laundering, promoting gambling and possession of gambling records. If convicted on all charges, the individuals could face up to more than 40 years in prison.
The corporate defendants face fines of up to $10,000 or double the amount of their illegal gains.
In carrying out the alleged conspiracy, the indictment claims Primary Development created playwithal.com specifically tailored to “meet the needs” of James W. Giordano and his son-in-law, Daniel B. Clarin.
The indictment charges that Giordano was the boss of the enterprise who controlled and oversaw the entire operation. The indictment further charges that Clarin was responsible for managing the day-to-day operations.
Playwithal is accessible both online and through a toll-free telephone number. Although the site is hosted in Tampa, Fla., its servers and “wire room terminal” are situated on St. Maarten or, more recently, in Costa Rica.
As of midday, the site was still operational.
Prolexic Technologies allegedly screened bettors’ Internet protocol addresses to search for viruses or tracking programs that could be used to hack into Playwithal’s servers.
“Internet gambling is a multi-billion-dollar worldwide industry that for too long has operated with impunity,” Brown said. “The defendants are accused of running a tightly knit and an incredibly lucrative — and illegal — global gambling operation.”
Search warrants issued in connection with the criminal charges resulted in the seizure of millions of dollars in cash, four Manhattan condos, jewelry, gold coins and a rare art collection.
The indictments are another step in a series of crackdowns by U.S. authorities in Internet gambling.
In July, David Carruthers, the CEO of London-based BetonSports, was arrested at the Fort Worth, Tex., airport while traveling to the company’s Costa Rican operations.
The London Stock Exchange suspended trading in the company’s shares on July 17, shortly after a U.S. court unsealed indictments against Carruthers, BetonSports and 11 current and former officials of the business.
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.
Earlier this month, BetonSports agreed to a permanent injunction barring the company from doing business in the U.S. The agreement settled the DoJ’s civil charges, but Carruthers remains under house arrest on the criminal charges.
At the end of September, Congress approved legislation requiring banks and credit card companies to block payments to the estimated 2,300 offshore gambling sites located outside of U.S. jurisdiction.
