March 26 was D-Day for the next rash of criminal complaints against online
gaming operators. Another 7 individuals were targeted and IGN is offering
you the complaints against those folks as well as the full text of the US
Attorney's news release on the matter.
Approved:
THOMAS C. RUBIN and DANIEL C. BECKER
Assistant United States Attorneys
Before:
HONORABLE SHARON E. GRUBIN
United States Magistrate Judge
Southern District of New York
UNITED STATES OF AMERICA
-v-
HAYDEN LNU, and
SPENCER LNU
SEALED COMPLAINT:
Violation of
18 U.S.C. 371
COUNTIES OF OFFENSE:
NEW YORK AND ELSEWHERE
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 1998, up to and including on or about March 18,
1998, in the Southern District of New York and elsewhere, HAYDEN LNU and
SPENCER LNU, the defendants, co-conspirators Jay Cohen and Steve
Schillinger, and others known and unknown, unlawfully, willfully, 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 HAYDEN LNU and
SPENCER LNU, the defendants, co-conspirators Jay Cohen and Steve
Schillinger, and others known and unknown, unlawfully, willfully and
knowingly, would and did use a wire communication facility 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,
HAYDEN LNU and SPENCER LNU, the defendants, and others known and
unknown, committed the following overt act in the Southern District of
New York and elsewhere:
a. On or about March 17, 1998, HAYDEN LNU, the defendant, had a
telephone conversation with an undercover FBI agent located in New York,
New York, posing as a potential bettor
b. On or about March 18, 1998, SPENCER LNU, the defendant, accepted a
telephone bet on a sporting event from an undercover FBI agent in New
York, New York, posing as a potential bettor.
(Title 18, 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 for two years. For the past 15 months, I
have been a member of the FBI's Computer Crimes 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 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 (which has claimed to be located in Antigua) is
using the Internet or other forms of wire communication facilities in
interstate and foreign commerce to conduct a sports betting business,
and if so, who was responsible for that conduct. As a result of the
investigation, on March 2, 1998, I swore out a complaint and obtained
arrest warrants charging Jay Cohen and Steve Schillinger, who are owners
of World Sports Exchange, with conspiracy to violation Title 18, United
States Code, Section 1084. A copy of that complaint, which is
incorporated by reference herein, is attached as Exhibit 1.
7. On or about March 4, an agent of the FBI called World Sports Exchange
to notify them of the arrest warrants. On or about March 10, 1998, Jay
Cohen surrendered to the FBI, and is presently released on bail.
Schillinger remains a fugitive.
8. Since that time, FBI agents have been monitoring World Sports
Exchange's web site on the Internet and its toll-free telephone number,
and have determined that it has continued to operate in the sports
betting business and has continued to use wire communication facilities
in interstate and foreign commerce to facilitate that business.
9. On or about March 17, 1998, an undercover FBI special agent posing as
a potential bettor (the "UC") called a toll-free telephone number for
World Sports Exchange, and spoke with the defendant HAYDEN LNU. HAYDEN
LNU provided the UC with information to open a sports betting account
with World Sports Exchange, including the Western Union wire
instructions needed to send money to World Sports Exchange. Although
HAYDEN LNU gave the UC his first name, when the UC asked him for his
last name, HAYDEN LNU refused to answer the question. Later in the
conversation, HAYDEN LNU asked the UC if he is with the FBI. HAYDEN LNU
further told the UC that FBI agents are required to reveal their
identity when asked.
10. On or about March 18, 1998, using the information provided by the
defendant HAYDEN LNU, the UC sent $300 to World Sports Exchange via
Western Union wire transfer.
11. Later that day, the UC, while in New York, New York Called World
Sports Exchange's toll-free telephone number and asked for HAYDEN LNU.
SPENCER LNU, the defendant, answered the telephone, identified himself
as "Spencer," and stated that HAYDEN is not there. SPENCER LNU verified
that the UC's money had arrived, and proceeded to open a betting account
on behalf of the UC. During the conversation, the UC stated that he is
in New York, New York, and SPENCER LNU replied that he is from
California and used to be a trader on the stock exchange. To facilitate
the betting process, SPENCER LNU gave the UC a password and a user
name. The UC then asked for the odds on the Georgia Tech vs. Penn
State and the Minnesota vs. Marquette NCAA basketball games. After
receiving the odds, the UC bet $55 that Georgia Tech would beat Penn
State by more than 7.5 points, and $55 that Minnesota would beat
Marquette by more than 6 points. The UC lost both bets.
12. During the conversation with SPENCER LNU, the defendant, the UC
asked SPENCER LNU for his last name, but SPENCER LNU refused to answer
the question. At one point in the conversation, after the UC asked
additional questions, SPENCER LNU told the UC that he sounds like a
"federal agent." Later in the conversation SPENCER LNU told the UC that
the United States government had cracked down on Internet gambling
sites, including world Sports Exchange and SDB Global, and that the
government believed that SPENCER LNU’s conduct was illegal under Title
18, United States Code, Section 1084. SPENCER LNU further stated that
he did not want to provide his last name because he is afraid of being
arrested.
13. FBI agents have spoken with an individual who is familiar with the
operations of World Sports Exchange (the "CI") . The CI advised FBI
agents that World Sports Exchange is run by four individuals, Jay Cohen,
Steve Schillinger, SPENCER LNU, the defendant, and HAYDEN LNU, the
defendant. The CI confirmed that both SPENCER LNU and HAYDEN LNU have
worked for World Sports Exchange since at least 1997. The CI further
advised FBI agents that SPENCER LNU used to work at the Pacific Stock
Exchange.
WHEREFORE, deponent prays that warrants issue for the arrests of HAYDEN
LNU and SPENCER LNU, and that they be imprisoned or bailed as the case
may be.
LISA J. FERENCE
Special Agent
Federal Bureau of Investigation
Sworn to before me this
day of March, 1998
SHARON E. GRUBIN
UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF NEW YORK
("Hayden LNU" and "Spencer LNU" are identified in the press release as
Hayden Ware and Spencer Hanson)