Nature of the Offenses

A. Elements Explained

The defendants, independently, understand that the offenses charged in the Information to which they are pleading guilty have the following elements:

Count 1: Endeavoring to Impair or Obstruct IRS Administration of the Internal Revenue Code (violation of 26 U.S.C. 7212)

(a) The defendant in any way corruptly (that is, acting with the intent to secure an unlawful benefit either for oneself or another);

(b) endeavored (that is, effectuated an arrangement or tried to do something the natural and probable consequence of which is to obstruct or impede the due administration of the Internal Revenue Laws); and

(c) to obstruct, impede or impair the due administration of the Internal Revenue Code.

Count 2: Wire Wager Act (violation of 18 U.S.C. § 1084)

(a) The defendant was engaged in the business of betting and wagering;

(b) The defendant, as part of this business, knowingly used or caused to be used, a wire communication facility to transmit in interstate or foreign commerce bets or wagers, or information which assisted in the placing of bets or wagers, on any sporting event or contest;

(c) The defendant acted knowing the transmission using the wire communication facility began in one state and ended in another or began in one nation and ended in another.

Count 3: Money Laundering (violation of 18 U.S.C. § 1956)

(a) The defendant conducted, or aided and abetted, a financial transaction, that is, the purchase of

(i) real estate located at 2501 Alton Parkway, Irvine, California (more particularly described infra);

(ii) real estate located at 922 East Oceanfront, Unit 2, Balboa, California (more particularly described infra);

(iii) a motor vehicle, to wit: one 1995 Lamborghini Diablo, VIN ZA9D407FXSLA12370.

(b) The defendant conducted or aided and abetted the financial transaction with money that was the proceeds of specified unlawful activity, that being recurring violations of 18 U.S.C. 1084, the Wire Wager Act;

(c) At the time the defendant conducted or aided and abetted the financial transaction, the defendant knew the money represented the proceeds of some form of unlawful activity; and

(d) the defendant conducted or aided and abetted the financial transaction with the intent (i) to promote the carrying on the specified unlawful activity or (ii) to engage in conduct constituting a violation of 26 U.S.C. §§ 7201 or 7206.

Each defendant has fully discussed the facts of this case with defense counsel. Each defendant has knowingly committed, or caused to be committed, each of the elements of each crime to which he/it is pleading guilty, and admits that there is a factual basis for these guilty pleas. The following facts are true and undisputed, and are admitted by each defendant:

Beginning in 1995 and continuing through at least Spring, 1998, in the Central District of California, the Eastern District of Missouri, the Middle District of Florida, the Northern District of Georgia, the District of Nevada, the Cayman Islands, Antigua, the Netherlands Antilles, the Turks and Caicos Islands, the Republic of Ireland, the Isle of Man, and elsewhere, an association in fact of individuals, including defendants Marc Meghrouni and Scott D. Shaver, and domestic and foreign legal entities, including defendant Hoss Limited, Inc., existed. For purposes of this pleading, the association in fact will be referred to as "Paradise Casino," an enterprise designed to conduct sports bookmaking activities -.n order to generate income and make a profit, all or a portion of which would be paid to owners, operators, managers, agents, employees and associates of Paradise Casino.

After planning and agreeing in the Central District of California to establish and operate an off-shore sports bookmaking business to accept wagers from United States bettors, and others, and to return winnings to United States bettors, and others, the defendants Marc Meghrouni and Scott R. Shaver, acting with others, caused the acquisition of a gaming license in Antigua and established or controlled one or more banking accounts there. The defendants acquired a computer system and programming as well as telecommunications services and, in August, 1995, began accepting, from United States bettors, wagers on sporting events while the defendants initially housed Paradise Casino in a hotel on Antigua; however, within approximately a month due to the effects of a hurricane passing by Antigua, the defendants and their associates temporarily moved operations of their sports bookmaking enterprise to an apartment near Atlanta, Georgia, and conducted sports bookmaking there, using telephone communications in interstate and foreign commerce. Within days, the operation of Paradise Casino returned to Antigua and, some months later, was moved to Curacao, on the Netherlands Antilles.

Throughout the period, persons desiring to wager on sporting events would contact Paradise Casino and its personnel, most frequently using interstate and foreign telephone service for voice and computer communications between Paradise Casino's location and the bettors, who most often were located in the United States. Frequently, the bettors were induced to or knew to communicate with and place wagers with Paradise Casino in this fashion due to marketing efforts by Paradise Casino in the United States, including print and broadcast advertising and sports tout service referrals. Using various means, United States-based bettors would wager with Paradise Casino and its off-shore banking accounts, as part of the wagering process,, funds aggregating in excess of $300,000,000, and the bettors' winnings were returned to those bettors by Paradise Casino. In Autumn, 1995, Paradise Casino experienced difficulty in negotiating (at an Antiguan bank undercapitalized for the volume of checks received) checks drawn on a Missouri bank and payable to Paradise Casino, as a result of numerous wire transfers. Paradise Casino then arranged for a person in Georgia to receive funds and checks that it would transfer there. In turn, that person arranged for the checks to be negotiated at a bank in St. Louis, Missouri, and the funds thus acquired and other funds acquired by Paradise Casino in the course of operating its sports bookmaking business were used for various purposes.

Some of the funds were transferred or held using means designed, at times, to evade, avoid and unlawfully minimize federal tax obligations incurred by various of the associated individuals and entities participating in the operation of the enterprise, means which the defendants and others had agreed upon, and which would, and did, impair, impede, obstruct and defeat the administration of the Internal Revenue Code by the Internal Revenue Service. As an indirect means of making Paradise Casino-generated funds available for that enterprise's purposes as part of the scheme and as an investment by defendant Meghrouni, in November 1995, a person acquired and titled in his name a 1995 Lamborghini Diabio motor vehicle, VIN ZA9D407FXSLA12370, for nearly a quarter million dollars, doing so at the direction of Paradise Casino personnel, including defendant Meghrouni. Likewise, in April and May, 1996, a person agreed to and did acquire and title in his name a beachfront condominium in Balboa, California, for approximately three- quarters of a million dollars, with funds generated by Paradise Casino, and did so at the direction of defendant Meghrouni, who was already renting the property, living in it, had decided to purchase it, and who procured the nominee purchaser and caused the funds for the purchase to be wire-transferred to the seller of the condominium, in which defendant Meghrouni continued to reside. Then, in the summer of 1996, the individual defendants caused defendant Hoss Limited, Inc., to be incorporated in Nevada and, soon thereafter, formed a related entity in Curacao, Netherlands Antilles, called Hoss Limited and, in March 1997, registered in Nevada the Grand Hoss Limited Partnership, which served to facilitate the business operations and funds transfers which were a product of the Paradise Casino enterprise. Thereafter, defendant Shaver caused Paradise Casino-generated funds to be deposited into an off-shore Personal Services Leasing account. Later, in March, 1997, some of these and other Paradise Casino-generated funds were used to purchase an office building in Irvine, California. The building was purchased in the name of Hoss Limited, Inc., which paid approximately $1 million of the approximate $2 million purchase price with funds loaned to the corporation by defendant Meghrouni, who, thereafter, moved to the office building his sports tout service and related businesses he controlled under the name "Price Enterprises." At no time did the defendants, nor their individual or corporate associates, nor the enterprise itself, ever report their sports bookmaking/wagering activity to the Internal Revenue Service or otherwise attempt to file reports concerning, or pay federal excise taxes upon, this sports wagering business.

In engaging in this conduct, defendants Meghrouni and Shaver corruptly endeavored to obstruct, impede or impair the due administration of the Internal Revenue Code by the Internal Revenue Service. Each individual defendant, while engaged in the business of betting and wagering, and as a part of that business of betting and wagering, and as a part of that business, knowingly used and caused to be used wire communications transmitting bets or wagers or information which assisted in the placing of bets or wagers on sporting events and contests, in interstate and foreign commerce. Further, in engaging in this conduct, defendant Hoss Limited, Inc. conducted or aided and abetted a financial transaction; did so with money that- was the proceeds of specified unlawful activity, that being recurring violations of Title 18, United States Code, Section 1084; then knowing that the money represented the proceeds of some form of unlawful activity; and did so intending to promote the carrying of the specified unlawful activity and to engage in conduct violating Title 26, United States Code, Sections 7201 or 7206.