Former Director and CEO of BetonSports Pleads Guilty to Federal Racketeering Charges
ST. LOUIS, MO—David Carruthers pleaded guilty today to a racketeering conspiracy that resulted in a loss of between $7 million and $20 million and involved more than 250 victims, U.S. Attorney for the Eastern District of Missouri Catherine L. Hanaway announced.
"Illegal sports gambling across state and international borders by telephone or internet is a crime," said Hanaway. "Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses."
Carruthers, a citizen of the United Kingdom, was hired by Gary Kaplan in approximately June, 2000, as CEO of BetonSports.com, an existing sportsbook organization based in Costa Rica. Carruthers agreed to conduct the enterprise through a pattern of racketeering acts, including repeated mail fraud, Wire Wager Act violations, operation of an illegal gambling business and money laundering. He also developed BetonSports to the extent that it could be publicly offered for sale on the AIM, a market operated by the London Stock Exchange. In July, 2004, David Carruthers began serving as a director of BetonSports, PLC.
In furtherance of the conspiracy, members of the BetonSports organization made false representations to the targets of its advertising campaigns and customers by:
- Creating and disseminating advertising throughout the United States which represented that its Internet and telephone gambling operations were legal and licensed. They failed to disclose known material facts, namely that the U.S. government and most state governments viewed such operations as illegal, and that they did not have a license to operate legally anywhere in the United States.
- Representing to potential customers that money transferred by them to BetonSports on account was safe and readily available to be withdrawn at anytime. BetonSports was actually using the funds to support and expand its operations, including the purchase of Easybets. When BetonSports ceased operations in July 2006, it could not repay its customers over $16 million held on account.
"BetonSports was a very large and diverse operation. While BetonSports operated offshore, their illegal activities were not outside the long arm of the law. This plea is a significant step in the government's efforts to end the proliferation of U.S.-facing offshore sportsbooks," said John Gillies, FBI Special Agent-in-Charge, St. Louis Office.
"Gambling is not a victimless crime, especially when the internet is used with its global reach," said Toni Weirauch, Special Agent-in-Charge of IRS Criminal Investigation (IRS-CI). "IRS has focused its attention on offshore activities through the enforcement of tax, money laundering and other related financial criminal statutes within its jurisdiction."
Carruthers, 51, pleaded guilty before U.S. District Judge Carol E. Jackson. He now faces a maximum penalty of 20 years in prison and / or fines of up to $250,000. Sentencing has been set for Oct. 2, 2009.
Gary Stephen Kaplan, 50, is charged with numerous felony violations of federal laws including the Wire Act, Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy, mail fraud, and interstate transportation of gambling paraphernalia. He and four co-defendants are facing trial in September 2009.
The charges set forth in an indictment are merely accusations, and the remaining defendants are presumed innocent until and unless proven guilty.
Hanaway commended the work on the case by the FBI, IRS-CI and the Chesterfield, Mo., Police Department. Assistant U.S. Attorneys Steve Holtshouser, Steven Muchnick and John Bodenhausen, and Special Assistant U.S. Attorney Charles Birmingham are handling the case for the U.S. Attorney's Office.
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