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BetOnSports Founder Pleads Guilty In US,
by Glen Shaipro, LawAndTax-News.com, New York
Tuesday, August 18, 2009
Gary Kaplan, founder of BetOnSports (BoS), has entered guilty pleas to multiple
federal charges, Acting United States Attorney Michael W. Reap announced on
August 14.
Pursuant to a complex plea agreement, Kaplan, 50, entered pleas of guilty
to charges of conspiracy to violate the Racketeer Influenced and Corrupt Organizations
(RICO) statute, conspiring to violate the Wire Wager Act and violating the Wire
Wager Act.
Kaplan appeared before United States District Judge Carol E. Jackson, in St.
Louis. As part of the plea, Kaplan will forfeit to the United States USD43,650,000
in criminal proceeds. If the court ultimately accepts the terms of the plea
agreement, Kaplan will be sentenced to no less than 41 months and no more than
51 months, according to the Justice Department.
Kaplan admitted in court that beginning in the mid to late 1990s, he set up
business entities offshore in Aruba, Antigua and eventually Costa Rica to provide
sportsbook services to US residents through websites and toll-free telephone
numbers.
US residents became customers of BetOnSports by depositing funds on account
and placing wagers over US toll-free telephone lines and via the internet using
the deposited funds. Funds were sent from the US customers to BoS operations
outside the United States and BoS sent winnings from outside the United States
to its US customers.
According to the prosecution, by 2004, the BetOnSports Costa Rica base employed
approximately 1,700 people. During the year ended January 31, 2004, BetOnSports
had close to 1 million registered customers, accepted over 10 million sports
bets in a cumulative gross amount that exceeded USD1bn.
The guilty pleas conclude a lengthy investigative and prosecution effort by
several law enforcement agencies, including the Internal Revenue Service and
the Federal Bureau of Investigation (FBI). Sentencing has been set for October
27, 2009.
Kaplan has been in custody since his arrest in March 2007 and is perhaps the
highest-profile victim of the crackdown on internet gambling by the US authorities.
In addition to moral concerns about internet gambling, the US authorities were
also uncomfortable that billions of dollars in wagers were flowing offshore
to organizations they knew little about.
The US gambling laws have always been something of a grey area, especially
since the rise of the internet. But the Unlawful Internet Gambling Enforcement
Act (UIGEA) of 2006 sought to clarify the situation by effectively blocking
access to the lucrative US internet gambling market for offshore operators.
The Act prohibits gambling businesses from knowingly accepting payments in connection
with unlawful internet gambling, including payments made through credit cards,
electronic funds transfers, and checks - although the legislation had been found
in breach of international trade laws.
"Gary Kaplan made millions of dollars by making it too easy for people
to gamble away their hard earned money without having to leave their homes,"
said John V. Gillies, Special Agent in Charge of the FBI in St. Louis. "Today's
guilty plea should have a lasting effect because Kaplan was not only the founder
of BetOnSports, he was also one of the pioneers of illegal online gambling.”
Gillies added that the FBI is busy in its pursuit of two remaining suspects.
“We will follow all leads, no matter how far, to bring to justice those
involved in this scheme," he said.
Acting Attorney Reap also thanked the governments of Jersey and Switzerland
for their assistance in concluding the prosecution.
A comprehensive report in our Intelligence Report series
examining the new possibilities that offshore e-commerce open up for business,
and analysing the offshore jurisdictions that have led the way in offering professional
e-commerce regimes for international business, with a particular focus on e-gaming,
is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp
and a description of the report can be seen at
http://www.lowtaxlibrary.com/asp/description_report6.asp
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