FBI Complaints - World Sports Exchange

11 March 1998

Isn't chaos fun? While everyone and their brothers try to sort out this Caribbean sportsbook fiasco, IGN has a few nuts and bolts for you to chew on. Following is a copy of all the complaints filed by the US Government. So, without further ado, lets have a look at these buggers as well as the full release from the Dept. of Justice.


Approved: 
THOMAS C. RUBIN and  DANIEL C. BECKER
Assistant United States Attorneys

Before: HONORABLE NAOMI REICE BUCKWALD
 United States Magistrate Judge
 Southern District of New York

- - - - - - - - - - - X
   SEALED
UNITED STATES OF AMERICA  COMPLAINT
 -V-  Violation of
   1a U.S.C. S 371
JAY COHEN and
STEVE SCHILLINGER,

 Defendants.
  COUNTIES OF OFFENSE:
  NEW YORK AND ELSEWHERE
- - - - - - - - - - - - - - - - - - - - X
 

SOUTHERN DISTRICT OF NEW YORK, ss.:

LISA J. FERENCE, being duly sworn, deposes and says that she is a Special Agent with the Federal Bureau of Investigation and charges as follows:

COUNT ONE

1. From in or about 1997, until on or about today's date, in the Southern District of Now York and elsewhere, JAY COHEN and STEVE SCHILLING, the defendants, and others known and unknown, unlawfully, wilfully, and knowingly did combine, conspire, confederate, and agree together and with each other to commit an offense against the United States, to wit, to violate Title 18, United States Code, Section 1084.

2. It was a part and object of the conspiracy that JAY 
COHEN and STEVE SCHILLINGER, the defendants, and others known and
unknown,, being engaged in the business of betting and wagering, 
unlawfully, wilfully and knowingly, would and did use a wire communication facil-ity for the transmission in interstate and foreign commerce of bets and wagers and information assisting in the placing of bets and wagers on sporting events and contests, and for the transmission of a wire communication which entitled the recipient to receive money and credit as a result of bets and wagers and for information assisting in the placing of bets and wagers, in violation of Title 18, United States Code, Section 1084.
 

OVERT ACTS

3. In furtherance of said conspiracy and to effect the
object thereof, JAY COHEN and STEVE SCHILLINGER, the defendants,
and others known and unknown, committed the following overt acts in
the southern District of New York and elsewhere:

a. On or about May 10, 1997, STEVE SCHILLINGER the defendant, had a telephone conversation with a private investigator in New York posing as a potential bettor.

b. In or about December 1997, an employee of World Sports Exchange in Antigua sent a $200 check by Federal Express to an undercover agent in Now York, New York, posing as a bettor.

c. On or about December 8, 1997 JAY COHEN the defendant, had a telephone conversation with an undercover agent in Now York, Now York.

(Title 28, United States Code Section 371.)

The bases for my knowledge and the foregoing charge are in part, as follows:

4. I have been an FBI agent f or two years. For the past 15 months, I have been a member of the FBI's Computer Crisis squad and am familiar with computers and the Internet.

5. I am familiar with the facts and circumstances set forth below from my participation in the investigation and from my conversations with other law enforcement agents and witnesses. Because this Complaint is being submitted for a limited purpose, I have not-included details of every aspect of this investigation. Where conversations or statements are related herein, they are related in substance and in part.

6 . During the course of this investigation, I received information from various sources that World Sports Exchange, Ltd. ("World Sports Exchange") was operating a sports betting business over the Internet.  As a result of this information, the FBI began an investigation to determine, among other things. whether World Sports Exchange was using the Internet or other forms of wire communication facilitate in interstate and foreign commerce to conduct a sports betting business, and, if so, who was responsible for that conduct.

7. Based on my experience on the FBI’s Computer Crimes squad as well as various publications I have read, I know that the Internet in an immense worldwide computer network used by millions of individuals daily.  The Internet is comprised of many smaller computer networks that are connected to each other via telephone and other data lines.  The World Wide Web (“WWW”) is a hypertext-based system that facilitates the ability to find and access information on the Internet.  Many businesses, including World Sports Exchange, use the WWW to advertise, promote, and provide information about their services.  Typically, communications over the Internet -- including the references in this complaint to accessing WWW pages -- take place over ordinary telephone lines through the use of a modem. Those communications travel over ordinary telephone lines between the points of origin (such as a computer server that is used to store and transmit WWW pages) and the points of reception (such as the personal computer of an individual who accesses a particular site on the WWW).

8. Using an undercover Internet account that can be accessed at the FBI offices in New York, New York, I accessed the web site for World Sports Exchange, at www.wsex.com. The World Sports Exchange web site revealed the following:

a. World Sports Exchange is a sports wagering service that accepts bets on various sporting events, including football, hockey, baseball, and basketball.  The web site included “lines," or point spreads on various sporting events.

b. World Sports Exchange offers a toll-free telephone number, (800) 655-9739, to call for information concerning sports betting.  In addition, the web site indicated that sports bets could be placed with World Sports Exchange through its web site, by using a computer.

c. In order to bet with World Sports Exchange, a bettor is required to open an account (which could be done over the Internet), and send a minimum deposit of $300.  The deposit could be sent via Western Union (to World Sports Exchange, care of JAY COHEN, the defendant, on the Caribbean island of Antigua) , bank check or by bank wire transfer.

9. On or about October 7, 1997, an undercover FBI special agent posing as a potential bettor (the “UC”) called (800) 655-97390 the toll-free number for World sports Exchange.  An unidentified male ("UM") answered the telephone by stating "World
Sports Exchange." The UM proceeded to give the UC various
information designed to assist the UC to place a bet with World
Sports Exchange.  The UM stated that World Sports Exchange
required a minimum bet of $10 if the bet in placed over the Internet (except for $5 bets on "parlays") and a minimum bet of $50 for telephone wagers.  The UM added that World Sports Exchange would accept payment via Western Union or a bank wire.
 
 

10. On or about October 16th 1997, the UC, while in New York, New York opened a betting account with World Sports Exchange by accessing World Sports Exchange's Internet site and by filling out a form located on that site.  Later that day, the UC sent $500 by Western Union in New York, New York, to World sports Exchange in Antigua, to meet the minimum deposit requirement of World Sports Exchange.

11. On or about October 17, 1997 the UC accessed World Sports Exchange's web site, reviewed point spreads listed on the site, and placed three bets by clicking various items on the site.  The UC bet on three 'National Football League ("NFL") games scheduled to be played on October 19, 1997.  The UC bet $55 that the Philadelphia Eagles would beat the Arizona Cardinals by more than 8 points, $11 that the total points scored in the Jacksonville Jaguars vs. Dallas Cowboys game would be less than 43, and $44 that the Dallas Cowboys would beat the Jacksonville Jaguars by more than 4.5 points.  The UC lost all three bets.

12. On or about October 24, 1997, the UC accessed World Sports Exchange's web site from a computer located in New York, New York, reviewed point spreads listed on the site, and placed two bets by clicking various items on the site.  The UC bet on two NFL games scheduled to be played on October 26, 1997.  The UC bet $55 that the Denver Broncos would beat the Buffalo Bills by more than 7 points, and $55 that the Philadelphia Eagles would beat the Dallas Cowboys (there was no point spread).  The UC won the second of those two bets, and $50 in winnings was credited to the UC’s account with World Sports Exchange.

13. On or about October 31, 1997, the UC accessed World Sports Exchange's web site from a computer located in New York, New York, reviewed point spreads listed on the site, and placed two bets by clicking various items on the site.  The UC bet on two NFL games scheduled to be played on November 2, 1997.  The UC bet $55 that the San Francisco 49ers would beat the Dallas Cowboys by more than 7 points, and $55 that the New England Patriots would beat the Minnesota Vikings (there was no point spread).  The UC tied the first bet and lost the second bet, and $55 was credited to the UC’s account with World Sports Exchange.

14. On or about November 7, 1997, the UC accessed World Sports Exchange's web site from a computer located in New York, New York, reviewed point spreads listed on the site, and placed two bets by clicking various items on the site.  The UC bet on two NFL games scheduled to be played on November 9, 1997.  The UC bet $55 that the total points scored in the Arizona Cardinals vs. Dallas Cowboys game would be lose than 38.5 points, and $55 that the New York Giants would not lose to the Tennessee oilers by more than three points.  The UC won the first of those two bets, and $50 in winnings was credited to the UC’s account with World Sports Exchange.

15. On or about November 14, 1997, the UC called World Sports Exchange's toll-free number, (800) 655-9739, from the FBI offices in New York, New York, and placed two bets over the telephone.  The UC bet on two National Hockey League (“NHL”) games scheduled to be played later that day.  The UC bet $50 to win $52.50 that the Philadelphia Flyers would beat the Florida Panthers, and $60 to win $50 that the Now Jersey Devils would beat the Colorado Avalanche.  The UC won both bets, and $102.50 in winnings was credited to the UC's account with World Sports Exchange.

16. On or about December 3, 1997, the UC called World Sports Exchange's toll-free number, (800) 655-9739, and requested that $200 of the money in the UC’s account be returned to the UC.  On or about December 8, 1997, the UC received by Federal Express a $200 check, which was payable through the Chase Manhattan Bank in New York, New York.

17. On or about December 8, 1997, a UC placed a call to (268) 480-3888, and asked for JAY COHEN the defendant.  The UC proceeded to have a consensually-recorded telephone call with COHEN, during which COHEN admitted that he was president and one of the owners of World Sports Exchange.

18. On or about December 12, 1997, the UC called World Sports Exchange's toll-free number, (800) 655-9739, and requested that the remainder of the money in the UC's account be returned to the UC.  On or about December 16, 1997, the UC received by Federal Express a $167.50 check, which was written on a check from the Chase Manhattan Bank in New York, New York.  The check was accompanied by a letter from "Jay Cohen, President" that stated: "Thank you for playing at The World Sports Exchange.”

19. I have reviewed various newspaper articles in which both JAY COHEN and STEVE SCHILLINGER, the defendants,, are quoted in connection with their business, World Sports Exchange.

20. I have spoken with a private investigator (the "PI') (not working at the direction of the FBI), who told me that on or about May 10, 1997 the PI made a consensually-recorded telephone call with STEVE SCHILLINGER, the defendant, at (800) 655-9739.  I have reviewed a tape and draft transcript of that call and have learned the following:

a. The male who answered the telephone identified himself an STEVE SCHILLINGER, and asked the caller if he had read about World Sports Exchange in the Wall Street Journal.

b. SCHILLINGER stated that he was one of the partners of World Sports Exchange and that he was from San Francisco, where he worked on the Stock Exchange.

c. SCHILLINGER told the PI that he could do all of his betting with World Sports Exchange either over the telephone or through a computer.

d. SCHILLINGER told the PI that when World Sports Exchange has to pay winning betters, it sends checks cut on a “New York” bank, Chase Manhattan Bank.

e. SCHILLINGER told the PI that World Sports Exchange had approximately 400 customers, and that 150 of them were from New York.

21.  I have reviewed telephone records, which reveal that (800) 655-9739 is a toll-free number provided by LDDS World Communications, a telephone company located in Mississippi.  The subscriber name for (800) 655-9739 is Post Time Sports Ltd., 115 Perimeter Ctr., Suite 130, Atlanta, Georgia, 30346.

22.  The review of the telephone records of (800) 655-9739 also reveals that this number was called thousands of times from locations all over the United states,, including numerous calls from New York, New York.  I believe it is likely that many if not all, of these calls, like these from the UC, were from bettors (i) receiving information about sports betting with World Sports Exchange or (ii) placing sports bets with World Sports Exchange.

23.  I have reviewed bank records relating to World Sports Exchange, which reveal that numerous customers have wire-transferred thousands of dollars from the United States, through Chase Manhattan Bank in New York, New York,, to a bank account in the name of World Sports Exchange at Swiss American Bank Ltd. in Antigua.
 

24. I have reviewed Pro Football Weekly, a magazine distributed in, among other places, the Southern District of New York, which contains advertisements for World Sports Exchange.  One ad suggests that consumers "bet football on-line at the World Sports Exchange," which, according to the ad, would make a "good use for the Internet."

25. I have reviewed correspondence which reveals that World Sports Exchange used an advertising agency in San Francisco, California, to coordinate the placing of its advertisements in Pro Football Weekly magazine.

WHEREFORE, deponent prays that warrants issue for the arrests of JAY COHEN and STEVE SCHILLINGER, and that they be imprisoned or bailed as the case may be.

LISA FERENCE
Special Agent
Federal Bureau of Investigation