Antiguan Internet Gambling Firm Indicted In US Court

by Mike Godfrey, Tax-News.com, Washington

22 May 2006

The US District Court for the District of Columbia unsealed an indictment last week against the operators of two internet gambling firms based in Antigua and Barbuda for offenses related to an estimated $250 million worth of internet gambling wagers.

The 12-count indictment, filed April 7, 2005, alleges that from April 1998 through the date of the indictment, Scott and Davis operated WWTS, one of several entities through which they illegally enticed gamblers to send funds from the United States to Antigua with the intent that these funds would be used for wagers on Internet casino games and high profile sporting events.

The indictment alleges that wagers were placed by toll-free telephone numbers and through the website, www.BetWWTS.com, and other sites controlled by the defendants in violation of the Wire and Travel Acts.

The indictment also alleges that by causing funds to be sent from places within the United States to places abroad with the intent to promote Wire and Travel Act violations, Scott and Davis engaged in a money laundering conspiracy.

Furthermore, the indictment specifies subsequent financial transactions made by Scott with the proceeds of this illegal gambling activity as separate money laundering violations, as well as alleging his failure to report foreign bank accounts to the Internal Revenue Service.

According to the indictment, Soulbury Limited is one of the “shell” corporations that Scott used to hide his personal profits from the illegal gambling enterprise, including $10 million of allegedly illegal proceeds that Scott moved to the UK Channel Island dependent territory of Guernsey.

The United States, with assistance from the Guernsey government, was able to distrain $7 million of these gambling proceeds from the US correspondent account of a foreign bank in a parallel civil forfeiture action filed in the District of Columbia in December 2003.

Funds for wagers to be placed on, or funds paid out from, 'offshore' Internet gambling remain against the law in the United States despite a ruling by the World Trade Organisation April 2005 which upheld one of Antigua and Barbuda's complaints over US prohibitions preventing US banks and major internet search engines from doing business with gambling firms on the island. US federal laws bar the placing of bets across state lines by electronic means, preventing Antiguan online gambling companies from accessing US customers.

US punters are estimated to be behind up to half of the $12 billion a year wagered in cyber casinos. Antigua-based operators are thought to account for 25% of this turnover.

After losing the WTO case last spring, the United States pleaded for a year’s delay to implement federal legislation to accommodate the ruling. But the year has passed without US action to either close the loophole or make Internet gambling legal. In fact quite the contrary: a bill sponsored by Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary subcommittee on crime, which is currently moving forward in Congress, would add an “enforcement mechanism” to the Wire Act to address the situation where the gambling business is located offshore but the gambling business used bank accounts in the United States.

The indictment came as no surprise to Antigua’s Ambassador to the WTO, Dr John Ashe.

“These indictments, coming down at a time when the United States is supposed to be undertaking efforts to comply with the rulings of the WTO, are surely no coincidence," Caribbean Net News quoted him as observing.

"It is more than just a little ironic that the United States Department of Justice has chosen to single out for prosecution a well-known gaming service provider from Antigua, a jurisdiction that has been leading global efforts to license, regulate, supervise and oversee a robust yet clean and safe gaming industry over the Internet - and the only jurisdiction to take on the United States at the World Trade Organisation and win on this exact issue," he added.

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