The defendants in the federal case against BetonSports are facing new charges, IGamingNews has confirmed.
The United States government on Sept. 4 issued a third superseding indictment which appeared to be vastly different from the original one issued in June 2006, as well as the first superseding indictment in June 2007, both in its wording and in the application of the charges.
The office of the United States Attorney for the Eastern District of Missouri refused to comment on the changes, so IGN ran both indictments by Patrick O'Brien, an attorney at Greenberg Traurig, who spent 26 years as a special agent in the United States Treasury.
After comparing the two, Mr. O'Brien reasoned that the government's case against most of the defendants previously depended on the Racketeer Influenced and Corrupt Organizations Act -- or RICO -- charge, which was weak. With the expanded charges and an added conspiracy charge, however, the government has a much stronger case.
The original indictment focused primarily on Gary S. Kaplan and Norman Steinberg, the founder and co-founder of BetonSports, respectively, and the three Lenis men -- William H., William L. and Manny -- who ran the Florida-based marketing company that promoted BetonSports for several years.
Almost all of the 23 original charges applied specifically to Mr. Kaplan, Mr. Steinberg and the Lenis family members. The remaining defendants, who include David Carruthers, the former chief executive of BetonSports, were charged with only one count of RICO conspiracy originally.
The previous charges included one count RICO conspiracy; one count mail fraud; 10 counts transmission of wagers/wagering information; one count interstate transportation of gambling paraphernalia; aiding and abetting; two counts tax evasion; six counts interference with administration of internal revenue laws; and one RICO forfeiture count.
In recent months, however, the case has been through several changes.
In April, Magistrate Judge Mary Ann Medler recommended that counts 14-22 -- the charges of tax evasion and obstruction -- against Mr. Kaplan be dropped, noting that wagers placed by United States-based bettors, accepted by BetonSports entities in Antigua and Costa Rica, fall beyond the territorial reach of the United States wagering excise tax.
District Judge Carol E. Jackson has final jurisdiction over the decision, but the charges have been omitted from the new indictment.
In addition, the three Lenis men recently pled guilty to reduced charges. Therefore, they have been excluded from the most revised indictment and are scheduled for sentencing on Oct. 24, 2008.
The new charges against Mr. Kaplan and the remaining defendants include extended mail fraud allegations -- four instead of the original one -- an additional conspiracy charge and an additional forfeiture charge.
Mr. O'Brien said because the original indictment focused primarily on Mr. Kaplan and Mr. Steinberg, the only count against the others was the RICO conspiracy count. If the government lost on the RICO count, Mr. Carruthers -- and probably the other defendants -- would have walked with no conviction.
"The new indictment protects against these two problems by making Carruthers and about six other defendants in the four mail counts and the Wire Act conspiracy," Mr. O'Brien said in an e-email.
Furthermore, Mr. Kaplan and Mr. Steinberg (who is not yet in the government's custody) are charged with multiple counts of using a wire communication facility for the transmission of wagers or wagering information, and Mr. Kaplan has an additional charge of interstate transportation of gambling paraphernalia.
Finally, the government has insured its case against two potential losses -- both dependent on a RICO conviction. The original forfeiture relied on the RICO count, but there would have been no forfeiture if the government had lost on the RICO charge, according to Mr. O'Brien.
"It strengthens the forfeiture action by adding a civil forfeiture count," he added. "That way if they lose the RICO conspiracy and even the entire criminal case, they can still get the civil forfeiture because civil forfeiture depends on a preponderance of evidence (50 percent plus), while the RICO forfeiture required the RICO Conspiracy conviction, which required proof beyond a reasonable doubt."
An arraignment has been scheduled for Sept. 16.
Click here to view the original indictment.
Click here to view first superseding indictment.
Click here to view current superseding indictment.