Reprinted from Caribbean Net News
caribbeannetnews.com

Ban on US operations of Antigua gambling operator extended

Saturday, September 2, 2006

by: Andrew Harris and Benjamin Israel

USA (Bloomberg), CHICAGO: Betonsports Plc., the internet sports book indicted for illegal gambling, with offices in Costa Rica and Antigua, has been barred from resuming business in the US while prosecutors try to serve legal papers on the company.

US District Judge Carol Jackson in St Louis gave the government additional time to deliver papers necessary to give the court jurisdiction in the case. A temporary order was issued July 17, the day the Justice Department unsealed a 22-count indictment against Betonsports, founder Gary Kaplan and Chief Executive Officer David Carruthers.

"The primary goal has been to serve Betonsports so we can move forward, because it is essential that the company be notified," Jackson said from the bench. She issued a written order extending the bar until September 20.

Betonsports wasn't represented by a lawyer at the hearing. It hasn't sent counsel to appear in any of the proceedings being heard by the judge.

Government lawyer Marty Woelfle told Jackson the Justice Department couldn't serve Betonsports in Costa Rica because the office is closed. Prosecutors hope to serve the company in London within a week, Woelfle said.

London-based Betonsports and 12 people including Kaplan and Carruthers were indicted June 1 by a federal grand jury. Charges include racketeering, mail fraud and facilitation of gambling across state and national boundaries.

Trading of Betonsports stock in London was suspended July 18 at the company's request. The company ran its US Internet business from Costa Rica and Antigua.

Carruthers, 48, was arrested in July as he changed planes in a Dallas airport. The CEO and seven others pleaded not guilty July 31. He was freed on $1 million bond and is under house arrest in St. Louis. Kaplan hasn't been taken into custody.

Carruthers's attorney Scott Rosenblum of Clayton, Missouri, didn't answer calls and e-mail message seeking comment.

In 2003, the company's Web site, Betonsports.com, had 100,000 active players who placed 33 million wagers worth more than $1.6 billion, the indictment said.

Betonsports promotional materials said the company had more than 2,000 inbound telephone lines, computer servers capable of handling 5,600 simultaneous Web transactions and more than 2,000 employees before major events including the Super Bowl and the National Collegiate Athletic Association's March basketball tournament, the indictment said.

Four of those indicted worked for a group of family-run Florida direct-mail businesses that did promotional work for the sports book, the indictment said. Those defendants pleaded not guilty on July 31, as did Kaplan's indicted sister and brother.

The order extended this week, called a temporary restraining order, bars the company from operating any Web site that "purports to offer sports betting or transmit betting information in the United States." The company is banned from accepting bets placed by US customers or US advertising.

With the order is a list of more than 500 Web sites the government said Betonsports uses to solicit wagers in the US.

The judge granted the government's request today for a 30-day extension, the court docket said. Later, when the order itself was made part of the court record, it said the extension expires September 20.

Terri Dougherty, a spokeswoman for US Attorney Catherine Hanaway in St Louis, said by phone she was unaware the judge had extended the order only to September 20 and couldn't immediately explain it except that the judge "has the right to do what she wants."

The order says Betonsports must say on its Web site that it no longer accepts bets from people in the US and that Internet betting from the US is illegal.

Woelfle said in an interview on Thursday that Betonsports hasn't used "the language asked for" on its Web site. The site's main page today said that in light of the court's action, company directors no longer consider US operations viable. It didn't say transmitting bets to the US is a violation of American law as the court ordered.

Betonsports announced August 11 it would shut down its US operations. The company has promised to repay US clients.

"By complying with the Department of Justice and not taking bets in the US, Betonsports is hoping the department will ease up on the payment processes" to enable the company to gain more sales from outside the US and help it pay off creditors, spokesman Ged Brumby said at the time.

The failure of Betonsports and Kaplan to appear in court to contest the charges may be part of a defense strategy intended to deny the court has jurisdiction.

"There are major questions right now as to where transactions occur over the Internet," said Stephen Saltzburg, a former US deputy assistant attorney general who now teaches law at George Washington University in Washington.

The St Louis court's control over Betonsports will largely depend on whether prosecutors can prove the company had sufficient voluntary contact with the US for the court to have jurisdiction over it, Saltzburg said.

"When you're dealing with the Internet," he said, the issue is clouded by the question of "who is reaching out to whom?" Kaplan may be able to avoid the court's reach if he remains in a country where Internet gambling isn't a crime and thus isn't an extraditable offense, Saltzburg said.

The civil case is US v. Betonsports Plc., 4:06-cv-01064; the criminal case, US v. Betonsports Plc., 4:06-cr-00337, both US District Court, Eastern District of Missouri (St Louis).

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