TELECOM Digest OnLine - Sorted: Online Gambling Site Operators Arrested; Equipment Seized

Online Gambling Site Operators Arrested; Equipment Seized

David Koenig (
Tue, 18 Jul 2006 14:12:40 -0500

By DAVID KOENIG, Associated Press Writer

Federal officials have charged 11 people, including the CEO of a big
gambling Web site, alleging they committed conspiracy, racketeering
and fraud in taking sports bets from U.S. residents.

The Justice Department said Monday it is seeking the forfeiture of
$4.5 billion, cars and computers from the defendants, including
BetOnSports PLC and three other companies.

BetOnSports Chief Executive David Carruthers and four other defendants
were arrested over the weekend. Carruthers was arrested Sunday at
Dallas-Fort Worth International Airport during as he awaited a flight
from Texas to Costa Rica, where the company has operations.

The 22-count indictment was unsealed Monday in St. Louis, where a
federal judge also ordered BetOnSports to stop accepting bets placed
from within the United States.

Several of the defendants live outside the United States, which will
make them hard to catch, said U.S. Attorney Catherine Hanaway in
St. Louis.

"This is a tough crime to prosecute," she said.

Among those who live abroad is Gary Stephen Kaplan, the founder of
BetOnSports, which is incorporated in the United Kingdom and listed on
the London Stock Exchange.

Trading of the company's shares was suspended in London on Tuesday.
Shares of BetOnSports fell as much as 24 percent Monday following news
of Carruthers' arrest, but they recovered to close 17 percent lower at
122.50 pence ($2.24).

In the fiscal year ending Feb. 5, BetOnSports reported a 65 percent
gain in operating profit on continuing operations to $20.1
million. The company said it handled $1.77 billion worth of bets for
the year, up 25 percent.

Kaplan is a former New York area bookie who moved his operations to
the Caribbean after being arrested on gambling charges in New York in

Despite the move, the United States has remained Kaplan's main market,
officials said. He is now living in Costa Rica and owns 15 percent of
the company, according to the indictment. A warrant was issued for his

Officials said those arrested include Kaplan's brother, Neil Scott
Kaplan, who handled purchasing for the company. He was arrested in
Fort Pierce, Fla. Two other defendants were arrested in Miami and
another was arrested in Philadelphia.

Carruthers was being held in Fort Worth after he was detained while
trying to make a connecting flight Sunday from the United Kingdom to
Costa Rica. A federal magistrate ordered him held until a detention
hearing on Friday.

Carruthers' first appearance in court Monday lasted about 10
minutes. He was led into the courtroom in handcuffs, wearing a lime
green T-shirt with the words "World Traveler" across the front, faded
jeans and gray suede shoes.

Tim Evans, an attorney who appeared on Carruthers' behalf, handed him
a lengthy document, adding, "You won't have time to read it all, of

Kevin Smith, a spokesman for BetOnSports, said Carruthers and other
company officials had no idea that there was an indictment.

"Certainly had they told us, we would have been more than willing to
negotiate with them and work on whatever these charges are," Smith
said. "There wouldn't have been any need to nab him while he's
waiting on a layover for a flight."

Others named in the indictment include Kaplan's sister and several
BetOnSports employees. The other three companies named in the indictment
are based in Florida and handle promotional activity for BetOnSports.

The indictment charges Kaplan with failing to pay federal wagering
excise taxes on more than $3.3 billion in U.S. wagers.

Authorities also charged that Kaplan's group fraudulently claimed that
Internet and phone wagering on sporting events was legal and licensed.

Internet gambling has become a political issue in Washington.

Last week, the House passed a bill that would make it illegal for
American banks and credit card issuers to make payments to online
gambling sites. The bill's fate in the Senate is uncertain, in part
because of exemptions granted for horse racing and state lotteries.

Associated Press writer Jeff Douglas in St. Louis contributed to this

Copyright 2006 The Associated Press.

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