FBI Moves to Shut Down BETonSPORTS

[GatorMike]

Gaming shares tumble as FBI targets BETonSPORTS

By Pete Harrison 1 hour, 22 minutes ago

LONDON (Reuters) - Fears of a crackdown on online gambling in the United States knocked 600 million pounds ($1.10 billion) off UK gaming stocks on Tuesday after the

Gambling executives in the $12 billion-a-year industry were also assessing their personal exposure after BETonSPORTS said it had been unable to contact Chief Executive David Carruthers, who is being held in Fort Worth, Texas.

A U.S. indictment seen by Reuters laid out criminal charges against a number of individuals including BETonSPORTS founder Gary Kaplan and Carruthers, who had spearheaded a campaign to defeat a Republican-written bill to crack down on online gambling.

UK-listed stocks in the sector, which lost more than 300 million pounds on Monday, fell again after BETonSPORTS asked for its shares to be suspended.

Sportingbet was down 29 percent at 1400 GMT, while PartyGaming, 888 Plc and BETandWIN all fell more than 10 percent.

Although online gaming is not explicitly illegal in the United States, the U.S.
Department of Justice has always signaled its disapproval, saying it is prohibited by the Wire Wager Act.

As a result, online gaming companies have settled in offshore locations such as Antigua and Costa Rica and have operated freely in the United States -- until this week.

"The language used in the Department of Justice release suggests to us there is the possibility that other Internet sports books could be targeted," said leisure analyst Richard Carter at Numis Securities.

BETonSPORTS said it was urgently trying to clarify the situation and assess the impact of a temporary restraining order on its business in the United States, its biggest market.

"This comes a week after the extradition of the NatWest Three, and a lot of companies will be looking at their travel plans," said leisure analyst Wayne Brown at Altium Securities, referring to three British bankers extradited to the United States last week on fraud charges linked to defunct energy giant Enron Corp.

"It's not just travel," said one UK gaming executive who declined to be named. "The U.S. has proved it can get to anyone it wants in the UK. A lot of executives are feeling very uncomfortable."

Prime Minister
Tony Blair's spokesman declined to comment when asked whether gaming executives could be extradited to the United States.

CIVIL CASE

The U.S. Department of Justice said on Monday that BETonSPORTS was among 11 individuals and four corporations facing various charges of racketeering, conspiracy and fraud.

The founder of BETonSPORTS.com, Gary Kaplan, 47, was also charged with 20 felony violations and a warrant has been issued for his arrest, it added.

"BETonSPORTS.COM and other gambling Web sites operated by Gary Kaplan and his co-defendants offered gamblers in the United States illegal wagering on professional and college football and basketball," said a copy of the indictment seen by Reuters.

The indictment lists alleged violations from 2001 to as recently as April, 2006.

It includes alleged violations of the Wire Wager Act, which gaming companies such as 888 and PartyGaming have viewed as a reason not to enter the U.S. sports betting market.

The Federal Bureau of Investigation (FBI) has instructed four telephone companies to stop providing services to BETonSPORTS, the company said, citing the U.S. Department of Justice.

The United States has also filed a civil case ordering BETonSPORTS to stop taking sports bets there and to return money held by U.S. customers in their gaming accounts. A hearing in the case could be held within 10 days.

(Additional reporting by Marc Jones in London and Boris Groendahl in Vienna)

[The Judge]

Eleven Individuals and Four Corporations Indicted On Racketeering, Conspiracy And Fraud Charges
7/17/2006 5:34:00 PM

--------------------------------------------------------------------------------
To: National and State desks, Legal Reporter
Contact: U.S. Department of Justice, 202-514-2008

WASHINGTON - A federal grand jury in the Eastern District of Missouri has returned a 22-count indictment charging 11 individuals and four corporations on various charges of racketeering, conspiracy and fraud, the Department of Justice announced today. The indictment was returned on June 1, 2006, and unsealed today.

BetonSports PLC, a publicly-traded holding company that owns a number of Internet sportsbooks and casinos, was among the companies charged in the indictment. The founder of BetonSports.com, Gary Stephen Kaplan, 47, was charged with 20 felony violations of federal 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.

Other defendants in the racketeering conspiracy include: Kaplan's siblings, Neil Scott Kaplan and Lori Kaplan Multz; Norman Steinberg; David Carruthers, chief executive officer of BetonSports.com; Peter Wilson, media director for BetonSports.com; and Tim Brown, Steinberg's son-in-law. The three other charged companies, all Florida-based, were Direct Mail Expertise, Inc., DME Global Marketing and Fulfillment Inc. and Mobile Promotions Inc. Also charged are William Hernan Lenis; Monica Lenis and Manny Gustavo Lenis, owners and operators of the Florida companies; and William Hernan Lenis' son, William Luis Lenis.

"Illegal commercial gambling across state and international borders is a crime," said U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri. "Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses. 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."

The indictment alleges that Gary Kaplan started his gambling enterprise via operation of a sportsbook in New York City in the early 1990s. After Kaplan was arrested on New York state gambling charges in May 1993, Kaplan moved his betting operation to Florida and eventually offshore to Costa Rica. According to the indictment, BetonSports.com, the most visible outgrowth of Kaplan's sports bookmaking enterprise, misleadingly advertised itself as the "World's Largest Legal and Licensed Sportsbook." The indictment also alleges that Kaplan failed to pay federal wagering excise taxes on more than $3.3 billion in wagers taken from the United States and seeks forfeiture of $4.5 billion from Kaplan and his co-defendants, as well as various properties.

The indictment alleges that Gary Kaplan and Norman Steinberg, as the owners and operators of Millennium Sportsbook, Gibraltar Sportsbook, and North American Sports Association, took or caused their employees to take bets from undercover federal agents in St. Louis who used undercover identities to open wagering accounts. The indictment also alleges that Kaplan and Mobile Promotions illegally transported equipment used to place bets and transmit wagering information across state lines and that DME Global Marketing and Fulfillment shipped equipment to Costa Rica from Florida for BetonSports.com.

The racketeering conspiracy alleges that the defendants agreed to conduct an enterprise through a pattern of racketeering acts, including repeated mail fraud, wire fraud, operation of an illegal gambling business and money laundering.

In conjunction with the indictment, the United States has filed a civil complaint in federal court to obtain an order requiring BetonSports PLC to stop taking sports bets from the United States, and to return money held in wagering accounts to account holders in the United States. U.S. District Judge Catherine D. Perry issued the temporary restraining order today. A hearing in the civil case has been requested within 10 days. As authorized by federal statute, the FBI is issuing letters to four telephone companies, instructing them to stop providing phone service to the Internet sportsbooks and casinos operated by BetonSports PLC.

Gary Kaplan resides in Costa Rica and a warrant has been issued for his arrest. Neil Kaplan, 40, is in custody in Ft. Pierce, Florida. Carruthers, 49, a resident of Costa Rica and Bromsgrove, Worcestershire, England, is in custody in Ft. Worth, Texas. William Luis Lenis and Manny Gustavo Lenis are in custody in Miami. Tim Brown was arrested near Philadelphia. Warrants have been issued for the other defendants not currently in custody. The United States will seek extradition of all defendants to St. Louis for prosecution.

The charges are the result of a joint investigation by Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. The prosecution is being conducted by the Organized Crime and Racketeering Section of the Justice Department's Criminal Division and the U.S. Attorney's Office for the Eastern District of Missouri. The Florida Department of Law Enforcement, the Tampa Police Department, the Jacksonville, Fla. Sheriff's Office, and NFL Security and NCAA Enforcement Office personnel also assisted in the investigation.

The charges set forth in an indictment are merely accusations, and each defendant is presumed innocent until and unless proven guilty.

USNewsWire.com

[cptkirk321]

Originally Posted by The Judge

Eleven Individuals and Four Corporations Indicted On Racketeering, Conspiracy And Fraud Charges
7/17/2006 5:34:00 PM

--------------------------------------------------------------------------------
To: National and State desks, Legal Reporter
Contact: U.S. Department of Justice, 202-514-2008

WASHINGTON - A federal grand jury in the Eastern District of Missouri has returned a 22-count indictment charging 11 individuals and four corporations on various charges of racketeering, conspiracy and fraud, the Department of Justice announced today. The indictment was returned on June 1, 2006, and unsealed today.

BetonSports PLC, a publicly-traded holding company that owns a number of Internet sportsbooks and casinos, was among the companies charged in the indictment. The founder of BetonSports.com, Gary Stephen Kaplan, 47, was charged with 20 felony violations of federal 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.

Other defendants in the racketeering conspiracy include: Kaplan's siblings, Neil Scott Kaplan and Lori Kaplan Multz; Norman Steinberg; David Carruthers, chief executive officer of BetonSports.com; Peter Wilson, media director for BetonSports.com; and Tim Brown, Steinberg's son-in-law. The three other charged companies, all Florida-based, were Direct Mail Expertise, Inc., DME Global Marketing and Fulfillment Inc. and Mobile Promotions Inc. Also charged are William Hernan Lenis; Monica Lenis and Manny Gustavo Lenis, owners and operators of the Florida companies; and William Hernan Lenis' son, William Luis Lenis.

"Illegal commercial gambling across state and international borders is a crime," said U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri. "Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses. 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."

The indictment alleges that Gary Kaplan started his gambling enterprise via operation of a sportsbook in New York City in the early 1990s. After Kaplan was arrested on New York state gambling charges in May 1993, Kaplan moved his betting operation to Florida and eventually offshore to Costa Rica. According to the indictment, BetonSports.com, the most visible outgrowth of Kaplan's sports bookmaking enterprise, misleadingly advertised itself as the "World's Largest Legal and Licensed Sportsbook." The indictment also alleges that Kaplan failed to pay federal wagering excise taxes on more than $3.3 billion in wagers taken from the United States and seeks forfeiture of $4.5 billion from Kaplan and his co-defendants, as well as various properties.

The indictment alleges that Gary Kaplan and Norman Steinberg, as the owners and operators of Millennium Sportsbook, Gibraltar Sportsbook, and North American Sports Association, took or caused their employees to take bets from undercover federal agents in St. Louis who used undercover identities to open wagering accounts. The indictment also alleges that Kaplan and Mobile Promotions illegally transported equipment used to place bets and transmit wagering information across state lines and that DME Global Marketing and Fulfillment shipped equipment to Costa Rica from Florida for BetonSports.com.

The racketeering conspiracy alleges that the defendants agreed to conduct an enterprise through a pattern of racketeering acts, including repeated mail fraud, wire fraud, operation of an illegal gambling business and money laundering.

In conjunction with the indictment, the United States has filed a civil complaint in federal court to obtain an order requiring BetonSports PLC to stop taking sports bets from the United States, and to return money held in wagering accounts to account holders in the United States. U.S. District Judge Catherine D. Perry issued the temporary restraining order today. A hearing in the civil case has been requested within 10 days. As authorized by federal statute, the FBI is issuing letters to four telephone companies, instructing them to stop providing phone service to the Internet sportsbooks and casinos operated by BetonSports PLC.

Gary Kaplan resides in Costa Rica and a warrant has been issued for his arrest. Neil Kaplan, 40, is in custody in Ft. Pierce, Florida. Carruthers, 49, a resident of Costa Rica and Bromsgrove, Worcestershire, England, is in custody in Ft. Worth, Texas. William Luis Lenis and Manny Gustavo Lenis are in custody in Miami. Tim Brown was arrested near Philadelphia. Warrants have been issued for the other defendants not currently in custody. The United States will seek extradition of all defendants to St. Louis for prosecution.

The charges are the result of a joint investigation by Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. The prosecution is being conducted by the Organized Crime and Racketeering Section of the Justice Department's Criminal Division and the U.S. Attorney's Office for the Eastern District of Missouri. The Florida Department of Law Enforcement, the Tampa Police Department, the Jacksonville, Fla. Sheriff's Office, and NFL Security and NCAA Enforcement Office personnel also assisted in the investigation.

The charges set forth in an indictment are merely accusations, and each defendant is presumed innocent until and unless proven guilty.

USNewsWire.com

And there it is, the government wanting the CASH!!!

[TigerCat_Tania]

So what happens now to the owners/CEOs of other sportsbooks... such as BoDog... Calvin crosses borders all the time it seems and even holds conventions in Vegas. He also operates a music/entertainment feature on the site with many celebrities that are signed onto a BoDog label.

It seems as tho through this quotation here...

In conjunction with the indictment, the United States has filed a civil complaint in federal court to obtain an order requiring BetonSports PLC to stop taking sports bets from the United States, and to return money held in wagering accounts to account holders in the United States. U.S. District Judge Catherine D. Perry issued the temporary restraining order today. A hearing in the civil case has been requested within 10 days. As authorized by federal statute, the FBI is issuing letters to four telephone companies, instructing them to stop providing phone service to the Internet sportsbooks and casinos operated by BetonSports PLC.

This injunction is step number one in making it impossible for people in the US to gamble with BetonSports. So they are not shutting them down entirely, however it does appear that going for broke with the tax penalties will shut them down. This is only week one of the process of the bill. What about the other sportsbooks as I mentioned... what happens when they come to the States... will they also be displaced in FBI custody as well?

I know there is another forum/tracking place of which betonsports seems to advertise on... they are a silver sponsor... some may know the site. They are still listed on the section of Top Sportsbooks. WSEX, BoDog, SportsInteraction, Sportsbook, and BetUS are also all listed on that site as well as sponsors. I would not doubt one of those will also be a target in the coming months if not weeks.

This is sad that they moved into this so quickly...

[Romanowski]

Calvin is the one that brought all this heat on the industry

[Romanowski]

this all happened 8 years ago with Jay Cohen and WSEX

they are making an example of Carruthers for being so outspoken and the Wire Act is nothing new