U.S. Attorney Press Release

Capping an initial phase of federal undercover and financial investigations into offshore sports bookmakers whose activities violate federal tax and anti-racketeering laws, Audrey Fleissig, U.S. Attorney for the Eastern District of Missouri, announced today that two California individuals and a Nevada corporation have just pleaded guilty in the U.S. District Court for the Eastern District of Missouri to multiple federal felonies, agreed to forfeit millions of dollars in assets, and agreed to pay millions of dollars in back taxes, interest and penalties.

The three defendants today pleading guilty were:

(1) MARC MEGHROUNI (dob 12/26/60), of Balboa, California;
(2) SCOTT D. SHAVER (dob 12/12/59), of Garden Grove, California; and
(3) HOSS LIMITED, INC., d/b/a PARADISE CASINO, a Nevada corporation formed in 1996.

Meghrouni and Shaver pleaded guilty to one felony count of impairing the Internal Revenue Service in its administration of the internal Revenue Code, in violation of Title 26, United States Code, Section 7212. This crime carries a statutory maximum penalty of three years' imprisonment, a $250,000 fine, and supervised release term of one year.

Additionally, both Meghrouni and Shaver also pleaded guilty to one felony count of violating the federal Wire Wager Act (18 U.S.C. § 1084), through knowingly using and causing to be used as part of a wagering business wire communications (primarily the Internet and toll-free telephone numbers) in interstate and foreign commerce to transmit wagers and information which assisted in the placing of wagers on sporting events. This crime carries a statutory maximum penalty of two years imprisonment, a $250,000 fine, and a supervised release term of one year. The penalties for this crime can be ordered to be served consecutively to the penalties imposed for the tax crime conviction.

Furthermore, a corporation with which Meghrouni and Shaver were associated, Hoss Limited, Inc., d/b/a Paradise Casino, pleaded guilty to one felony count of money laundering, in violation of Title 18, 'United States Code, Section 1956. This crime carries a statutory maximum fine of $500,000 or, alternatively, a fine of twice the amount of criminally-derived property involved in the money laundering transaction, approximately $3.5 million.

The guilty pleas were made before U.S. District Judge Stephen N. Limbaugh, in St. Louis, Missouri. The federal prosecutor overseeing the investigation and conducting the prosecutions is Michael K. Fagan, an Assistant U.S. Attorney. Defendant Meghrouni and the corporate defendant are represented by Brian A. Sun of Santa Monica, California, while defendant Shaver is represented by David N. Wiechert of Capistrano Beach, California. The federal agencies primarily conducting the investigation have been the Internal Revenue Service-Criminal investigative Division, the United States Customs Service, and Interpol. Assistance was also provided by the investigative staff of the Organized Crime Unit, Office of the Prosecuting Attorney, Orange County, California.

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. The association in fact constituted "Paradise Casino," an enterprise designed to conduct sports bookmaking activities in 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 0. 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. Paradise Casino marketed its services 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.

As part of their efforts to impede the administration of the Internal Revenue Code, the defendants and others transferred or held some of the funds using means designed 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. For example, in November 1995, a person acquired and titled in his name a 1995 Lamborghini Diablo motor vehicle, 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 acquired and titled 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, and had arranged to purchase it through a nominee. Then, in the summer of 1996, the individual defendants caused defendant Hoss Limited, Inc., to be incorporated in Nevada arid, 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, all of 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 other-wise attempt to file required reports concerning, or pay required 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, 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 the internal Revenue Code.

The parties have agreed that the defendants will forfeit to the United States (1) a beachfront condominium, valued in excess of a million dollars, located at 922 East Oceanfront, Balboa (Orange County), California, (2) a modern office building, valued in excess of two million dollars, located in an office park at 2501 Alton Parkway, Irvine, California, and (2) a mint-condition 1995 Lamborghini Diablo automobile, valued at nearly a quarter million dollars. As for tax consequences of their activities, each defendant's plea agreement (1) included a closing agreement determining the corporate defendant's aggregate excise tax liability and tax penalties for 1997) 1998, and 1999 at $11,389,114, (2) agrees that each defendant is to pay all their back income and excise taxes, interest and penalties due from 1995 to the present; and (3) agrees that each defendant will identify and repatriate all off-shore funds and assets required to completely pay their tax obligations and will undergo independent financial audits, at each defendant's expense, by government approved auditors to ensure full and accurate assessment and collection of tax and forfeiture obligations owed by the defendants to the United States.

United States Attorney Audrey Fleissig of the Eastern District of Missouri, noted that the investigation which resulted in this prosecution is on-going. "Further prosecutions of persons criminally participating in and associating with illegal off-shore sports bookmakers can be expected, both in the Eastern District of Missouri and elsewhere," according to U.S. Attorney Fleissig. She added that there have been "recent federal prosecutions of off-shore sports bookmakers in New York for one-count violations of the Wire Wager Act, and others can be expected. A wide range of penalties exist to reach people and entities that persist in illegal conduct involving off-shore sports bookmaking affecting the United States," noted Fleissig.

In addition to the federal and state law enforcement agencies participating in the investigation, U.S. Attorney Fleissig also praised the contributions of the National Football League Security Office, of the National Collegiate Athletic Association, and of Western Union, a unit of First Data Corporation. The U.S. Attorney also singled out for particular credit the efforts of Special Agent Joseph Ludewig of the Internal Revenue Service-Criminal Investigation Division, explaining that "Special Agent Ludewig's singular expertise in analyzing this rapidly-growing field of crime, together with his meticulous world-wide fact-gathering enabled the Government to recover many millions of dollars in assets and back taxes, in addition to convicting the leaders of this enterprise's criminal conduct."