US Cracks Down on Web Gambling
Feds issue 11 indictments of online gambling company executives and arrest one CEO.
July 18, 2006
redherring.com
The U.S. government upped the ante on online gambling with the arrest of a high-profile executive of a Costa Rica-based sports-betting enterprise and the announcement of indictments charging 11 individuals with racketeering, conspiracy, and fraud.
David Carruthers, chief executive of BETonSPORTS and a British citizen, was arrested on Sunday as he attempted to change flights in Dallas on a trip from the United Kingdom to Costa Rica.
An indictment was also issued for the founder of BETonSPORTS, Gary Stephen Kaplan, who was charged with 20 felony violations of interstate transportation of gambling paraphernalia, and tax evasion.
Also charged with racketeering were Neil Scott Kaplan, Lori Kaplan Multz, Norman Steinberg, David Peter Wilson, and Tim Brown—all of BETonSPORTS.
Individuals from three other companies were also charged. The Florida-based companies were Direct Mail Expertise, DME Global Marketing and Fulfillment, and Mobile Promotions. The individuals charged were William Hernan Lenis, Monica Lenis, Manny Gustavo Lenis, and William Luis Lenis.
Arrested were William Luis Lenis, Manny Gustavo Lenis, and Tim Brown. Warrants have been issued for the other defendants. The government said it will seek extradition of those currently outside the country.
House Rules
One week ago the U.S. House of Representatives passed legislation that updates the Wire Act, a 1961 statute that made it a felony to use wire communications facilities to transmit bets. The bill now moves to the Senate (see US Outlaws Online Gambling).
The legality or illegality of online gambling currently exists in a kind of limbo as the 45-year-old Wire Act does not specifically address the Internet. But federal authorities believe they have enough to charge the 11 individuals and four companies.
“Illegal commercial gambling across state and international borders is a crime,” said U.S Attorney Catherine Hanaway of the Eastern District of Missouri.
“Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses,” she said. “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.”
Advocate of Regulation
Mr. Carruthers, whose company is listed on the London Stock Exchange, is a leading advocate of government regulation of online gambling, rather than the prohibition.
Before last week’s passage of the Internet Gambling Prohibition and Enforcement Act, Mr. Carruthers and other spokespeople for the industry were very active in an all-out lobbying effort.
In various publications Mr. Carruthers, 49, has debated opponents of online gambling, taking a conciliatory tone on issues such as problem gambling and underage gambling.
The industry has issued its own evidence that problem gambling and online gambling can be monitored and managed online.
Money Laundering
They have good reason to lobby the U.S. government. About half of the $12 billion generated by online gambling comes from the U.S.
More than 60 countries have chosen to regulate rather than prohibit online gambling.
The indictments charge the defendants with a pattern of racketeering acts, including repeated mail fraud, wire fraud, operation of an illegal gambling business, and money laundering.
The FBI has issued letters to four telephone companies, instructing them to stop providing phone service to the Internet sports books and casinos operated by BETonSPORTS.
Contact the writer: CMedford@RedHerring.com |
