Former BetonSports CEO pleads guilty

2 April 2009

Former BetOnSports CEO David Carruthers pled guilty to racketeering conspiracy Wednesday in U.S. District court in Missouri in a case that has been on-going since July of 2006.

The conspiracy resulted in a loss of between $7 million and $20 million and involved more than 250 victims, according to U.S. Attorney Catherine L. Hanaway.

"Illegal sports gambling across state and international borders by telephone or (the) Internet is a crime," said Hanaway. "Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses."

According to the St. Louis Post-Dispatch, Carruthers will agree to cooperate with prosecutors on other cases related to BetOnSports, including the upcoming trial of BetOnSports founder Gary Kaplan. Prosecutors will drop seven charges and recommend no more than 33 months in jail for Carruthers, according to the Post-Dispatch. Carruthers was facing a penalty of 20 years in prison and/or fines up to $250,000.

Kaplan was arrested in March of 2007 in the Dominican Republic. He faces numerous felony charges including violation of the Wire Act, RICO conspiracy, mail fraud and interstate transportation of gambling paraphernalia. Kaplan and four co-defendants face trial in September.

Carruthers, a U.K. citizen, was appointed BetOnSports CEO in 2000. He was arrested by FBI agents at Dallas-Fort Worth International Airport on July 16, 2006 shortly after the company was hit with federal racketeering charges. He was placed on house arrest a month later after posting a $1 million bond.

The government alleged that BetOnSports made false representations of its operation. BetOnSports claimed in various advertisements that Internet and telephone wagering was legal in the United States. The company also said that money in customer accounts was safe and readily available to be withdrawn at anytime. In fact, according to the government, BetOnSports was using the funds to support and expand its operations.

When BetonSports ceased operations in July 2006, it could not repay its customers over $16 million.

"BetonSports was a very large and diverse operation. While BetonSports operated offshore, their illegal activities were not outside the long arm of the law. (Carruthers') plea is a significant step in the Government's efforts to end the proliferation of US-facing offshore sportsbooks," said FBI Special Agent in Charge John Gillies.

BetonSports agreed in May of 2007 to provide witnesses and evidence against Carruthers and company founder Gary Kaplan. In return, Hanaway would bring no further charges against any BetonSports executives.

The official sentencing for Carruthers is set for October 2.