NEWS ALERT - David Carruthers, detained by US authorities

Casinomeister

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BetonSports NEWS ALERT

The egaming industry was rocked by the news Monday morning that David Carruthers, high-profile chief executive of BetonSports had been detained by the US authorities while on route from the UK to Costa Rica.

A statement from the company released to the London Stock Exchange said it was "seeking clarification as to the basis of the detention" and a further announcement would be made when appropriate.

Shares in the egaming sector took a hit as the news hit the markets on Monday morning, with BetonSports suffering a drop at one point Monday of over 20% or more that 30p. Sportingbet also fell over 10% or over 34p while PartyGaming saw its share price fall 7.5% or 8p.

The news comes one week after the US House of Representatives passed the Internet Gambling Prohibition Act. The bill proposes a further crackdown on internet gambling. It has now been passed to the Senate.

Analysts were at a loss to explain the developments. One suggested it was strange such a move should be made before any further legislation should have been made law. Another suggested the US Department of Justice might have a "beef" with BetonSports for "lots of reasons; telephone betting, advertising, the founder."

An industry source suggested the move might be a reaction to the extradition of the so-called NatWest Three last week. The three UK bankers have been arraigned in the US on Enron-related fraud charges.

eGaming Review will update on the news later today (Monday).
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Westland Bowl

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I definitely would want to know "the basis for detainment" too!!! There are a couple of issues here:

1. If US authorities are acting on behalf of the bill the passed the House last week, they evidently didn't read it or more importantly, don't know the political process of how a bill becomes law in US. The bill gives no authority whatsoever to anyone in anything just yet. And again, the bill only deals with the use of credit cards and transfers of funds for gambling purposes.

2. If US authorities arrested David because he runs a online sports betting operation albeit on non-US soil in which US citizens bet, it is like US authorities arresting the Amsterdam seller of pot (where it's legal) after discovering a small stash on a person entering the US. The US authorities would be over-stepping their jurisdiction in this case.

In any case, I guess the US authorities arrested David....because they can and likely get away with it. There are probably some other issues that will later come out about this.
 

jetset

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Unfortunately information on this is still sketchy, although that will change as the day wears on, I'm sure.

Carruthers is a fighter, and you can bet that he will have officialdom up to its ears in lawyers by now. He was apparently "detained" (an ambiguous term that could mean several things and not necessarily being in jail) at 11pm Sunday night.

Carruthers is a British subject, which would also have to be factored in to any action.

This could be just an intimidatory move if all they did was question him - he has been an articulate and high profile proponent of regulated online gambling in the USA for years and would therefore be a tempting target for the feds - remember how they tried to intimidate publications with that "you may be committing an offence" letter???
 

greedygirl

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Just in from eGaming Review:

News Alert: Carruthers 'due in court this afternoon



Chief executive of BetonSports David Carruthers will be appearing in court at the Federal Court House in Fort Worth, Texas, at 2pm US Central time according to a spokesperson at the FBI.

Carruthers was detained late on Sunday afternoon at Dallas airport by the US authorities while en route from the UK to Costa Rica.

He was detained by members of the FBI and the Inland Revenue Service (IRS) at around 4pm local time with a warrant for his arrest. He is believed to have spent a night in Tarrant county jail.

According to sources, Carruthers will be charged under the federal racketeering statutes or RICO (Racketeer Influenced and Corrupt Organisations Act).

The Federal warrant has been issued out of state with a sealed indictment. The hearing will determine his rights and the possible bail conditions. Sources indicate he is unlikely to be granted bail. The hearing will also determine which Federal Correctional Institute he will be sent to.

His wife Carol Carruthers was travelling with him but was released immediately. He would have spent a night in the local county jail.
 

Casinomeister

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greedygirl said:
...According to sources, Carruthers will be charged under the federal racketeering statutes or RICO (Racketeer Influenced and Corrupt Organisations Act).

The Federal warrant has been issued out of state with a sealed indictment. The hearing will determine his rights and the possible bail conditions. Sources indicate he is unlikely to be granted bail. The hearing will also determine which Federal Correctional Institute he will be sent to.
Well THAT sucks. Since when did he have a warrant out for his arrest??
 

spearmaster

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This is a bad sign. I wonder what he did to piss the government off... unless perhaps Sen. Leach went after him after being burnt badly in the Wall Street Journal (or was that NY Times) debate...
 

Westland Bowl

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It is possible that the Justice Department is trying to indirectly influence legislation in Congress, especially the Senate to put higher priority on developing a Senate version of the House bill. The timing couldn't have been better. But if I were a Senator, I'd be pissed off that the Justice Department would use such tactics to get me to do something.....strong-arming me through media manipulation.
 

Mousey

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If this Carruthers owns/runs a business (that is legal) in another country how can the FBI arrest him? Is this man a US citizen? 'corrupt organization'? According to whom?

Well, I'm confused as hell...

I keep getting this weird, icky, sick to my stomach feeling ... like when I read about the Burning Times, or about McCarthy and the Red Scare ....

It's all so damn surreal....

Thank you all for any news and future updates.
 

Mousey

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This is really getting ugly.... :mad:

CEO of offshore gambling Web site charged

04:49 PM CDT on Monday, July 17, 2006
Associated Press

FORT WORTH, Texas -- David Carruthers, whom authorities say runs an offshore gambling company that illegally takes bets from U.S. residents, was ordered held in custody Monday after a brief appearance in federal district court.

Carruthers was detained Sunday as he tried to change flights en route from the United Kingdom to Costa Rica, where his BetsonSports PLC is based.

A sealed indictment had been issued in Missouri.

Federal Magistrate Judge Charles Bleil ordered the indictment unsealed, but prosecutors declined to make a copy available until they could hold a press conference later Monday.

Federal prosecutor Mark Nichols summarized the multi-count indictment in open court, saying that Carruthers and several other people were charged with conspiracy in offering bets on professional and college sports to U.S. residents.

BetonSports took wagers on an Internet site and over a toll-free telephone line, Nichols said.

............

there's a bit more but I didn't want AP mad at me. LOL
 
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Mousey

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More info about the charges an the individuals charged.

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My apologies for an offsite link.
 

tennis_balls

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unfortunately this is par for the course for the US govt.

why deal with an issue and create a huge new source of revenue when you can just throw somebody in jail and proclaim moral victory?
 

winbig

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interference with the administration of Internal Revenue laws and tax evasion.

Since WHEN does a company NOT IN THE USA have to pay taxes to the US government?

Give me a fu******** break.

This is the most insane thing I've ever heard. I hope it gets thrown out before it even reaches trial.

It says on EVERY CASINO WEBSITE that if it's illegal in your jurisdiciton (state in this case), DO NOT SIGN UP. Plain and simple. This covers their ass, and there shouldn't be any liability on their part. Take the free gas debit card that is(was?) being offered by a couple of car manufacturers. It says in clear text on the ads "Not available in state1 and state2". If, for some reason, someone in state1 gets around this and that state finds out, are they going to go arrest the CEO of the car manufacturer?


Either way, if this guy gets convicted, onling gambling in the USA is over and done with forever, whether or not the bill passes.
 
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tennis_balls

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winbig said:
It says on EVERY CASINO WEBSITE that if it's illegal in your jurisdiciton (state in this case), DO NOT SIGN UP. Plain and simple. This covers their ass, and there shouldn't be any liability on their part.

I believe this guy's company also takes sports bets via telephone. This could be the reason the feds chose him as their example.

Some operators are much more careful in regards to US law. WillHill for example allows US customers but won't allow them to place a sports bet.

I'm guessing Calvin Ayre won't be attending the Bodog shin-dig in Vegas this summer.
 

whiterat1

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This guy is in Trouble with capital T

Here is the official statement from the DOJ.

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FOR IMMEDIATE RELEASE
MONDAY, JULY 17, 2006
www.USDOJ.GOV
CRM
(202) 514-2007
TDD (202) 514-1888

Eleven Individuals and Four Corporations Indicted on Racketeering, Conspiracy and Fraud Charges

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: Kaplans 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, Steinbergs 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 Kaplans sports bookmaking enterprise, misleadingly advertised itself as the Worlds 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 Departments Criminal Division and the U.S. Attorneys 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.
 

tennis_balls

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i see sportsbook review downgraded betonsports recently due to many complaints from players of theft so perhaps this is a case of karma being a biahtch
 

jetset

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Well, as the federal authorities point out at the foot of this release, these are only accusations at present, and the accuseds remain innocent until proven guilty - not much of a consolation when you're sitting in jail without the privilege of bail!

This passage was interesting: ""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."

If I remember correctly Missouri was the state from which much of the intimidatory activity against the media was waged, and it was the venue for the Casino City action that unsuccessfully challenged the DoJ on that media blitz of theirs.

The extradition threat was also revealing - after the Enron extraditions from the UK last week the feds seem to be more confident in deploying this method of bringing accuseds to court.

This whole sealed indictment thing is tricky, imo - Carruthers is a good example - the guy isn't informed that he's the subject of a US indictment and a warrant of arrest, and when he passes through the USA they nab him.

Edited to add that I think this is going to be one helluva legal fight - it certainly keeps the spotlight focused on internet gambling in the States...and it will play hell with stock prices in London.
 
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pacers31

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Sure looks like a government publicity stunt to help their bill along in the senate. I'm sorry but the tired old line of "click the mouse, lose the house" just doesn't fly with me. After all, it is my house to lose isn't it??? If they are truly worried about people losing the "house", why doesn't the government step in and save peoples houses when they lose jobs, get sick, etc. Feel good legislation for the right wing religious fanatics pure and simple!
 

Casinomeister

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The latest from CNN:

Racketeering charges hit bets firm

Tuesday, July 18, 2006 Posted: 0850 GMT (1650 HKT)


Online gaming company BETonSPORTS, whose chief executive has been detained in the United States, said on Tuesday it faced a case over taking sports bets there.

The group said it had been unable to contact Chief Executive David Carruthers but had seen a U.S. indictment "alleging various criminal acts against multiple defendants."

It also said it faced a civil case ordering BETonSPORTS to stop taking sports bets in the United States and to return money held by U.S. customers in their gaming accounts.

BETonSPORTS, whose shares were suspended on Tuesday from London's junior AIM index, said a hearing in the case could be held within ten days.

More here:

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Westland Bowl

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Several things regarding this issue:

1. If Kaplan was arrested in 1993, did he square things off back then before he moved his operations to Costa Rica? BetOnSports seems to have unresolved legal baggage from the past now biting them in the butt.

2. Is Kaplan a US citizen? Unless it has changed in the past few years, US law considers expatriated citizens to be still US citizens for 10 years afterwards. Even income earned overseas are taxed as if you still resided on US soil.

3. Did David Carruthers join BetonSports after Kaplan moved it to Costa Rica? To charge a non-US person with issues involving a company on non-US soil and such betting operations is legal within his own country is preposterous.

4. D.O.J. is seeking federal wagering excise tax on $3.3 billion? Ok, what is the tax on that? 1%? If so, then that is $33 million. So D.O.J. is seeking forfeiture of $4.5 BILLION on all indicted parties? Even those of British citizens? Bloody hell !! I guess the wide shotgun approach is used in hopes of having at least some charges to stick.

A thinking person can see huge holes in this case. It is appalling the level of professionalism is soooo low within US government. However, they have many times the power to hurt you and it is best to maintain a bit of respect for them if I were David or Kaplan or et al.
 

Casinomeister

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Westland Bowl said:
...Unless it has changed in the past few years, US law considers expatriated citizens to be still US citizens for 10 years afterwards. Even income earned overseas are taxed as if you still resided on US soil...
And expatriated Americans are still required to file every year and PAY US income tax - even if you are living abroad and earn your living outside of the US - and pay taxes in your host country. :mad:
 

cipher

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Westland Bowl said:
I definitely would want to know "the basis for detainment" too!!! There are a couple of issues here:

1. If US authorities are acting on behalf of the bill the passed the House last week, they evidently didn't read it or more importantly, don't know the political process of how a bill becomes law in US. The bill gives no authority whatsoever to anyone in anything just yet. And again, the bill only deals with the use of credit cards and transfers of funds for gambling purposes.

2. If US authorities arrested David because he runs a online sports betting operation albeit on non-US soil in which US citizens bet, it is like US authorities arresting the Amsterdam seller of pot (where it's legal) after discovering a small stash on a person entering the US. The US authorities would be over-stepping their jurisdiction in this case.

In any case, I guess the US authorities arrested David....because they can and likely get away with it. There are probably some other issues that will later come out about this.

Hi WB:

Actually this case could be a God send to the industry. Here's why, The DOJ is trying to boot strap RICO into this now and as scary as that might seem to be, the elements of RICO are exceedingly hard to prove in a case such as this. A good analogy would be that the DOJ has enlisted the use of a 105 Howitzer to kill a horse fly.

They (DOJ) wants this conviction in the worst way and it shows with DOJ throwing the RICO statute into the mix. The one bad thing for DOJ and filing under the RICO statute, is that if they (DOJ) are unsuccessful in getting a conviction there are severe penalties that can come down around the ears of the government hard and fast.

I'm sure that David Caruthers has a top notch legal team in place and if he dosen't he'd better get one and fast as there are numerous time sensitive filings that hav't to be made in RICO cases. And the courts have taken on the stance that mistakes won't be tolerated inasmuch as the stakes are so high for both sides.

Have a good one.
 

jetset

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Good post, Cipher. I have the feeling this is just the start of a major litigative issue that will have far-reaching repercussions for the DoJ as well as BoS.

The action is all from the authorities at present, and they may have ammunition of which we are unaware, but I suspect a strong response is taking shape as we speak.
 

cipher

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jetset said:
Good post, Cipher. I have the feeling this is just the start of a major litigative issue that will have far-reaching repercussions for the DoJ as well as BoS.

The action is all from the authorities at present, and they may have ammunition of which we are unaware, but I suspect a strong response is taking shape as we speak.

Hi Jet:

To my way of thinking this could be the "ball buster" that will make or break the industry as we know it.

Have a good one.
 

spearmaster

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Westland Bowl said:
2. Is Kaplan a US citizen? Unless it has changed in the past few years, US law considers expatriated citizens to be still US citizens for 10 years afterwards. Even income earned overseas are taxed as if you still resided on US soil.

I'm pretty sure Kaplan is American. But as Casinomeister said earlier, all US citizens residing abroad are still required to pay taxes to the US Government, minus any amounts they may have paid to countries with a dual-taxation agreement, and minus an automatic $80K exemption.

3. Did David Carruthers join BetonSports after Kaplan moved it to Costa Rica? To charge a non-US person with issues involving a company on non-US soil and such betting operations is legal within his own country is preposterous.

Carruthers joined long after Kaplan moved NASA/BetOnSports to Costa Rica.

The issue of legality of operations is irrelevant - they are not charged with illegally operating a sportsbook - they are charged with illegally accepting bets from Americans.

Any person consider to have committed a crime against American interests can be detained when on US soil.

I think that sucks - but it's the truth.

A thinking person can see huge holes in this case. It is appalling the level of professionalism is soooo low within US government. However, they have many times the power to hurt you and it is best to maintain a bit of respect for them if I were David or Kaplan or et al.

Most people overestimate the ability, brains, and skills of members of the US Government LOL. You would not believe how many idiots I have encountered. That being said, there are quite a few intelligent people in the US Government as well.

pacers31 said:
Sure looks like a government publicity stunt to help their bill along in the senate.

I don't think so. This operation was actually quite large and many arrests were made in various parts of the country. The cost of something like this would be very high - certainly not worth doing as a publicity stunt.

U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri said:
"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."

Rubbish. She is a federal attorney with NO jurisdiction over state issues. She is certainly not authorized to make this claim on behalf of any state.

Before we all go crying "end of the online gambling world in the US" let's remember that BetOnSports is a sportsbook - and sports wagering is considered to be illegal by virtue of the Wire Act.

Poker and casino gambling are NOT thought to be covered by this same law.

Should we be worried about this case? Yes, if you're into sports betting. Somewhat, if you're involved in the industry at all as an operator. No, if your gambling is confined to poker and casino and lottery and bingo et al.
 

Simmo!

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:rolleyes: This sat almost side-by-side in the Telegraph newspaper today with the announcement that from September 2007, UK licenced online casinos will be allowed to advertise on television.

Strange - the contrasting cultures of freedom and oppression side by side :rolleyes:
 
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