Internet gambling pioneer Kaplan arrested on RICO charges

In a surprise, but not unexpected move on October 13th ,2006 President George W Bush ,encouraged by Senate Majority Leader Bill Frist, signed the Unlawful Internet Gambling Enforcement Act HR4411 (it was was attached to Safe Port Act Conference Report) - making it, in effect, illegal for internet betting firms to collect money from US based gamblers. The bill passed 409-2 in the House of Representatives and on a voice vote in the Senate.

Consequently firms such as 888.com , Sportingbet, and Gibraltar-based Partygaming (who claimed this would lose them US$1 Bn gross revenues annually they announced on March 1st pre-tax profits fell 57% in 2006 )- ceased dealing with US based gamblers and concentrated on fleecing dumb folks elsewhere.

Betonsports had closed its US operations in August 2006 which had, it is claimed been responsible for nearly all of it's sizeable profuts. The gambling world was shocked when Betonsports then chief executive David Carruthers was detained while changing planes in the US. The company sacked him and shut down their business . Since then he has been under house arrest in St Louis since August.

On July 17th 2006 , Mr Gary Stephen Kaplan one of the founders of Betonsports was one of 11 people indicted on charges of racketeering, fraud, tax evasion and conspiracy. the defendents included the company. Mr K was personally charged with 20 felony violations of Federal laws including: the Wire Act, Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy, interstate transportation of gambling paraphernalia, interference with the administration of Internal Revenue laws and tax evasion.

To his surprise no doubt, as he was enjoying a Pina Colada in his Santo Domingo hotel in the Dominican Republic on Wednesday, he was arrested and was sent from there to Puerto Rico for apperance before a US magistrate.

The US Authorities have requested the court to move Mr K St Louis immediately or be held in custody pending a hearing to remove him to St Louis, to answer the charges against him.

Others charged with Mr K included Kaplan’s siblings, Neil Scott Kaplan and Lori Kaplan Multz; Norman Steinberg; David Carruthers, chief executive officer of BetonSports.com; Peter Wilson, media director for BetonSports.com; and Tim Brown, Steinberg’s son-in-law. The three other charged companies, all Florida-based, were Direct Mail Expertise, Inc., DME Global Marketing and Fulfillment Inc. and Mobile Promotions Inc. Also charged are William Hernan Lenis; Monica Lenis and Manny Gustavo Lenis, owners and operators of the Florida companies; and William Hernan Lenis’ son, William Luis Lenis. (Some of these have been arrested)

The racketeering conspiracy alleges that the defendants agreed to conduct an enterprise
through a pattern of racketeering acts, including repeated mail fraud, wire fraud, operation of an illegal gambling business and money laundering.

U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri. “Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses. This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws.”

Bill Frist in a statement after the Bill passed in the Senate....

"Gambling is a serious addiction that undermines the family, dashes dreams, and frays the fabric of society. Congress has grappled with this issue for 10 years, and during that time we've watched this shadow industry explode. For me as majority leader, the bottom line is simple: Internet gambling is illegal. Although we can't monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws."

Which is somewhat different to the attitude of our legislators, who cheered to the rafters Gordon's 10th Budget the unveiling last week of another another Government revenue stream of 15% on the revenues of UK based Internet gambling sites ... the gambling houses will however (as does all UK gambling) receive exemption from VAT. (The EU wide sales tax)... Hey I don't make the rules. What was that voting in Washington again ....?

The bill passed 409-2 in the House of Representatives and on a voice vote in the Senate.

Partygaming has a fascinating history - it was founded by Anurag Dikshit (अनुराग दीक्षित) (34), pronounced "Dix-it" The richest Gibralterian and Forbes 207 richest he owns approximately 30% of PartyGaming (Through his company Crystal ventures) after selling 23% of his stake in the company's Initial Public Offering. He wrote the original code at the request of California porn princess Ruth Parasol who commissioned the then 25-year-old Indian computer wiz to write some gaming software. She and her husband Ross de Leon own 40% of the company and are both US$ billionaires.

PartyGaming's head office is in Gibraltar; its computer servers run from there and from Kahnawake, a Mohawk Indian reserve within Canada, to keep them away from US lawyers; its marketing office is in London (in the same building as 888.com and Ldbrokes online bisiness) but most of its 1,000 staff work in a call centre and software development site in Hyderabad, southern India.