DOJ Indicts 4 Companies, 7 People in Latest Online Gambling Crunch

14 May 2007

The news out of Las Vegas, according to the Las Vegas Sun, is that charges have been brought against 7 people and 4 companies who stand accused of processing payments for illegal internet gambling.

According to the indictment, the 7 defendants live in Las Vegas and 2 of the 4 companies are based out of Salt Lake City. At a press conference US Attorney Brett Tolman said “We now have a body of information technology and strategy that can cross many jurisdictions”

While people who gamble online are basically exempted from criminal charges and some exemptions were carved out for horseracing, Tolman indicated companies are prohibited from processing online bets

“…indictment claims banks issuing Visa and MasterCard credit cards were fooled into processing Internet gambling charges. Defendants also channeled Western Union wire transfers through the Philippines.” The 34-count indictment includes charges of racketeering conspiracy, bank fraud, transmission of wagers and money laundering.

Among other things, the seven defendants are accused of “creating three companies to conduct fraudulent credit card and wire transfers for their clients – online gaming sites based outside the U.S., the indictment said.”

“An investigation is ongoing to determine if employees at the Utah businesses were aware they were involved in criminal activity and therefore could also face charges, he said. “There are layers of facade that have to be pulled back and uncovered,” Tolman said.”

“…, BetOnSports and four other unnamed gambling Web sites are mentioned in the indictment as doing business with the defendants and their companies. In March, the founder of BetOnSports, Stephen Kaplan, was arrested in the Dominican Republic. He and chief executive David Carruthers are facing federal charges of felony racketeering and fraud in St. Louis.”

“The indictment seeks to recover $150 million from the defendants as well as real estate, vehicles and other assets under RICO… None of the defendants is in custody, but all are scheduled to appear in U.S. District Court in Salt Lake City on May 30.”

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