BetOnSports Founder Accepts Plea BargainAugust 18, 2009 5:04 am
Gary Kaplan, the founder of BetOnSports, has accepted a plea offer from the US Department of Justice that will result in a 41 to 51 month prison sentence and the paying of $43.6 million in forfeitures.
The online sports betting mogul started the company in 1995, and between 2002 and 2004 took in around $4 billion in bets, mostly from the US. However, during that time he had run afoul of the Federal Wire Act which forbids interstate or foreign commerce bets using wire communication facilities. It was found that;
“Kaplan’s toll-free telephone lines terminated in Houston or Miami and then were forwarded to Costa Rica by satellite transmitter or fiber-optic cable. Some of Kaplan’s Web servers were located in Miami and were remotely controlled from Costa Rica.”
In 2006, an indictment was issued for Kaplan and eight of his associates, which included charges of racketeering and tax evasion and 9 months later he was arrested and has spent the last 2 years behind bars.
Kaplan claimed that he thought he was acting within the law as his servers were located in Antigua and Costa Rica, but prosecutors said that his customers were deceived into believing the betting transactions they were involved in were legal.
If found guilty he could have faced over 80 years in prison, but has now followed the lead of fellow co conspirator David Carruthers and accepted a plea bargain which includes a reduced sentence minus time off already served for admitting his guilt. Kaplan has already transferred the $43,650,000 he agreed to pay from his Swiss bank account last week.
David Carruthers was the CEO of BetOnSports and was responsible for helping to float the company on the London stock Exchange which netted its owners over $100 million. He was arrested in 2006 and this April agreed to testify against Kaplan and plead guilty to racketeering charges in return for a reduced prison sentence of no more than 33 months.
The Department of Justice said Kaplan and Carruthers set up BetOnSports ‘through a pattern of racketeering acts’ and that ‘They failed to disclose known material facts, namely that the US 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,’
John Gillies, an FBI agent involved in the case said: “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.”
In the USA internet gambling is banned and the government has continued to pursue relentlessly offshore sites targetting US citizens, and banks or credit companies processing online gambling payments.