NY Bust - Multiple Charges, 27 Defendants, Millions of Dollars Seized

15 November 2006

Criminal charges have been leveled against 27 individuals from three corporations in four states in connection with an alleged billion-dollar-a-year sports gambling operation.

According to a prepared statement released by the Queens County (QC) District Attorney's office, the operation was based in QC, New York, with connections to gambling wire rooms in Miami and the island of St. Maarten. Over a 28-month period, the operation booked more than $3.3 billion in wagers on a variety of sporting events, ranging from horseracing and football to basketball, NASCAR and hockey.

Meris Campbell, a spokesperson for Queens District Attorney Richard Brown, identified Florida-based Web server provider Prolexic Technologies Inc., as well as Web design providers Digital Solutions Inc. and New York-based Primary Development Inc., as defendants in the case.

A 33-count Enterprise Corruption indictment filed in QC Supreme Court charges that the operation promoted illegal sports betting in QC and elsewhere. Civil charges have also been brought against 20 of the defendants, who have been named as respondents to a $500 million forfeiture action filed in QC by the DA's Special Proceedings Bureau. The action alleges that the respondents engaged in a criminal enterprise that promoted illegal gambling activities and generated illegal wages.

Brown said that detectives assigned to the New York City police department's (NYPD) Organized Crime Control Bureau, as well as federal agents throughout the country, assisted with the busts. The defendants were brought in on charges of enterprise corruption--a violation of New York State's "Organized Crime Control Act"--as well as money laundering, promoting gambling, possession of gambling records and conspiracy.

Search warrants executed in several locations resulted in the seizure of gambling records, computers and hundreds of millions of dollars in property. The property includes four Manhattan condominiums, millions of dollars in cash, tens of thousands of dollars worth of casino chips from the Bellagio casino in Las Vegas, art, jewelry, gold coins and a football signed by the 1969 New York Jets following their Super Bowl victory.

The case was blown open in June of 2006, when NYPD investigators executed a search warrant on the home of professional poker player James Giordano, who allegedly headed the operation. Giordano was said to be responsible for managing the day-to-day operations, handling bettor disputes and accounting discrepancies and managing account information of the various runners and bettors. Investigators were interested in a laptop computer that Giordano rarely left unguarded. NYPD entered Giordano's home on June 15 and made a digital facsimile of the laptop's hard drive. Investigators used the information in a connect-the-dots move that culminated in his arrest yesterday evening in Pine Crest, Florida.

Where It All Began

Brown indicated that the investigation leading up to today's indictment began in July of 2004, when NYPD officers assigned to the Major Case Squad and the Queens Narcotics District generated information about the operation and began a joint investigation with the DA's Organized Crime and Rackets Bureau. The investigation employed court-authorized electronic eavesdropping that intercepted thousands of conversations.

The indictment alleges that between July 14, 2004, and Nov. 2, 2006, the defendants conspired to acquire money illegally through the operation.

Primary Development, and its CEO, Maurice Freeman, have been charged with developing a sports betting Web site, www.playwithal.com. The site, a computerized betting sheet, was advertised as "Playwithal Sportsbook," an "innovative sports gaming company." Its Web page was hosted in Tampa, Florida, and its servers and wire room terminals were situated offshore on St. Maarten and, more recently, in Costa Rica.

Also named in the indictment, Prolexic allegedly provided security for Playwithal's Web servers by screening Internet protocol addresses for viruses or tracking programs that could be used to hack its servers. Digital Solutions, a company incorporated under the laws of Costa Rica, and its American counterpart, D.S. Networks, allegedly provided the site with its servers, data and software.

The DA Says . . .

In a prepared statement, Brown said:

The defendants are accused of running a tightly knit and an incredibly lucrative--and illegal--global gambling operation. It is alleged that they were as savvy and adept in the use of computer technology as they were proficient in the art of secreting and laundering untold millions of dollars in unlawfully earned proceeds through casinos, shell corporations and bank accounts in a variety of locations from around the globe, including Central America, The Caribbean, Switzerland, Hong Kong and elsewhere. So massive was the enterprise that only with the assistance of federal law enforcement, police authorities in sister states and other nations have we been able to bring these defendants to justice.

The Defendants Say . . .

As of today, none of the defendants has released a statement.

The bust is the first of this nature in the United States since the enactment of the Unlawful Internet Gambling Enforcement Act of 2006 on Oct. 13.

Click here to view the QC DA's press release.

Click here to view the QC DA's indictment.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.