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Bet On SPort Founder Gary Kaplan Pleads Guilty

The mainstream media are carrying a dramatic story which surfaced late Friday in which BetOnSports plc founder Gary Kaplan pleaded guilty to federal racketeering conspiracy and other charges. The controversial gambling executive has reportedly settled with federal authorities on a forfeiture of $43.6 million in "illegally obtained revenue" as part of the deal.
 
As Assistant U.S. Attorney Steven Holtshouser remarked, Kaplan won't be left penniless.

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Acting United States Attorney Michael W. Reap said in a statement that Kaplan had entered pleas of guilty to charges of conspiracy to violate the RICO statute, conspiring to violate the Wire Wager Act and violating the Wire Wager Act.  He appeared before United States District Judge Carol E. Jackson in St. Louis, Missouri to formalise the agreement. 
 
Reap said that Kaplan will forfeit to the United States $43 650 000 in "criminal proceeds" and revealed that Kaplan had made a wire transfer of that amount from a Swiss bank account to a U.S. District Court bank account a week prior to entering his guilty pleas.  In addition, Kaplan has agreed to a jail sentence of no less than 41 months and no more than 51 months, which could be reduced by time served in custody already.
 
Kaplan founded the Costa Rica-based company in 1995, and by 2006, BetOnSports was one of the biggest and boldest of the online gambling firms, handling $1.8 billion annually in bets and headed by CEO David Carruthers.
 
Then the long-taunted US Justice Department struck, enforcing their argument that online gambling was illegal in terms of the Wire Act, and arresting Carruthers whilst he was in transit through the USA on his way to Costa Rica. It was the start of a series of arrests and Grand Jury actions that eventually saw the demise of the powerful company and the arrest and extradition from Dominica to the USA of Kaplan himself in March of 2007, nine months after his Grand Jury indictment.  He has been held ever since, and was widely believed to be preparing to go on trial in September.
 
Previously four other former executives, including two of Kaplan's siblings and Carruthers, pleaded guilty, although as yet no one has been sentenced.

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Prosecutors said the company falsely advertised that its Web-based and phone-based gambling operations were legal, and misled gamblers into believing that money transferred to BetOnSports was safe and available to withdraw at any time.
 
In fact, they said, the money was used to expand operations, including purchase of a rival betting firm. When BetOnSports was forced to cease operations in 2006, customers lost more than $16 million.
 
In Friday's St. Louis federal court hearing, Kaplan admitted to multiple charges of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, and agreed to serve 41 to 51 months in prison and forfeit $43.65 million.
 
"Taking away the assets from these illegal organizations hits criminals where it hurts most - it deprives them of their profits," said Toni Weirauch, Special Agent in Charge of IRS-Criminal Investigation.
 
“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,’’ John Gillies, special agent in charge of the FBI in St. Louis, said in the statement. “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.’’
 
Now bankrupt, London-based BetOnSports took in $1.25 billion in 2004, with 98 percent of that revenue coming from bets made through its Web site by U.S.-based clients, reports Bloombergs business news service. The company suspended trading of its shares on the London Stock Exchange on July 18, 2006, one day after the indictment was unsealed. BoS company directors submitted a guilty plea in May 2007 but no sentence has been passed on the little that remains of it.
 
At its height, BetOnSports employed over 1 700 people, mainly in Costa Rica, and boasted over a million players. The company went public on the AIM exchange in London in 2004, raising $100 million in a buoyant online gambling market. It is understood that the money found its way into Swiss bank accounts via trusts registered in Jersey in the Channel Isles.
 
Kaplan's agreement with the Justice Department must be endorsed by a judge at a hearing scheduled for October 27th this year.
 
“This brings to an end a very controversial enforcement action,’’ Houston defense lawyer Dan Cogdell, who accompanied Kaplan in court, told Bloombergs. “Kaplan long believed that what he did was lawful; it was only in the last several years he recognized it wasn’t lawful. He’s made every effort to make amends.’’
 
Cogdell said the government agreed to drop additional charges if the judge accepts the plea deal at the October 27th hearing. He said Kaplan should receive credit at sentencing for the two years he’s already spent in prison.
 
The Grand Jury indictment named the company, Kaplan, CEO David Carruthers and nine other people. Carruthers admitted to one count of racketeering conspiracy in April this year.
 
By June 23, all of the other individual defendants, including the founder’s siblings, Neil Scott Kaplan and Lori Beth Kaplan Multz, had pleaded guilty to criminal charges in the case, leaving their brother as the lone defendant facing trial.
 
The case is U.S. v. Betonsports, 06cr337, U.S. District Court, Eastern District of Missouri (St. Louis).



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