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BetOnSports executive Carruthers gets 33 months in prison


By the A.M. Costa Rica staff


David Carruthers, the former director and CEO of BetOnSports, the Costa Rican offshore sports wagering business, was sentenced to 33 months in prison Friday.

This sentencing concludes a lengthy investigative and prosecution effort by several law enforcement agencies, including the Internal Revenue Service and the Federal Bureau of Investigation, said Michael W. Reap, acting U.S. attorney.

Carruthers was the first major defendant in the case to plead guilty and he had agreed to testify against his co-defendants, if necessary, the U.S. Justice Department said.

Carruthers, a citizen of the United Kingdom, was hired by BetOnSports founder, Gary Kaplan, in approximately June 2000, as CEO of BetOnSports.com, an existing sportsbook organization based in San Pedro. In July 2004, Carruthers began serving as a director of BetOnSports, PLC.

"The prosecution and conviction of Carruthers is significant to the government’s efforts at enforcement of U.S. laws against offshore Internet and telephone sports wagering businesses, because Carruthers was both a foreign national and a top executive of BetOnSports," said Steven E. Holtshouser, assistant U. S. attorney. "Previously, executives, owners and investors believed that they were immune from the reach of U.S. law enforcement. Even their business plans were directly aimed at the U.S. market. Both the conviction of and sentence handed down against Mr. Carruthers should send a message to any foreign business conducting illegal activities in the United States, that geography does not render it untouchable."

"The successful investigation and prosecution of this case not only put this group of criminals in prison, but can indirectly help solve other computer-related crimes," said Roland J. Corvington, FBI special agent in charge of the St. Louis Division. Some of the millions of dollars previously forfeited from this case have already been granted to a regional computer crimes task force, which provides local law enforcement free technical and legal assistance to investigate such cases as Ch*ld predators online, he said.

In furtherance of the conspiracy, members of the BetOnSports organization made false representations to the targets of its advertising campaigns and customers, said the Department of Justice, 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.

"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 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, who also gave the sentence Friday.

Kaplan was sentenced Nov. 2. As part of the plea, Kaplan has forfeited to the United States $43,650,000 in criminal proceeds. An additional amount of approximately $7 million has been forfeited in related proceedings, bringing the total forfeiture in this case to over $50 million, the government said.

Carruthers was detained in the United States when he was returning to Costa Rica from London where he attended a board meeting.

He was highly visible and had authored opinion pieces in U.S. newspapers defending offshore gambling.

BetOnSports thumbed its nose at the federal government by setting up a trailer in the parking lot of a professional football stadium in Florida where individuals could place offshore bets.

BetOnSports is one reason the free trade treaty with the United States recognizes Washington's right to prosecute offshore gamblers. Antigua won a major case against the United States in the World Trade Organization on the grounds that Washington was hurting the gambling business there.

When Carruthers was detained, BetOnSports said it had 2,000 employees here during the high sports season. All lost their jobs when the company folded shortly after a federal indictment was handed up.