Utah DOJ Indicts 7 for Processing Online Gambling Transactions

The U.S. attorney for Utah on Friday announced charges against seven people and four firms, including BetUS and BetonSports, accused of processing transactions for online gambling and disguising credit card charges, according to the Associated Press and subsequent media coverage.

The indictment seeks to recover $150 million from the defendants in addition to real estate, vehicles and other assets used in running the operations under the federal Racketeer Influenced and Corrupt Organizations law (RICO).

The 34-count indictment includes charges of racketeering conspiracy, bank fraud, transmission of wagers and money laundering.

The seven defendants are accused of creating three companies to conduct fraudulent credit card and wire transfers between US customers and online gaming sites based outside the U.S., the indictment said.

Since last October, the Unlawful Internet Gambling and Enforcement (UIGEA) made it illegal for financial institutions to process transactions between online gambling sites and US citizens (except for the carve outs for horse betting, fantasy sports, and lotteries).

Though the UIGEA has till July 10, 2007 to specify how financial institutions are to implement the law, most major processors immediately ceased servicing the US market. The result was that American gamblers and US-facing gambling suppliers resorted to less than straightforward methods of payment. In fact, BetonSports was already dealing with the Eastern District of Missouri regarding the arrests of several execs including former CEO David Carruthers who was indicted on similar charges last summer (click here to read related article).

The indictment claims banks issuing Visa and MasterCard credit cards were fooled into processing Internet gambling charges.

Money laundering is just the disguising of the true nature of a financial transaction. Burke Hansen, attorney at large in San Francisco, observed in his article that the convoluted payment systems allegedly developed by the defendants appear to qualify as Money laundering.

According to US Attorney Brett Tolman, two of the companies, Hill Financial Services and Gateway Technologies, provided accounting and transaction processing services in Utah, and then routed the payments through foreign-based companies called CurrenC and CurrenC Worldwide. CurrenC and CurrenC Worldwide is based in other countries including British Virgin Islands, Korea, Jamaica and the United Kingdom. It processed most of the credit card and wire transfers.

"There are layers of facade that have to be pulled back and uncovered," Tolman said.

The defendants live in Las Vegas, but two of the companies involved were based in Draper, a Salt Lake City suburb, according to the indictment.

As Gambling 911 commented, "There is no hypocrisy when it comes to the state of Utah. They don't allow gambling in any form, not even state lotteries. So it struck us as beyond bizarre that any company would select Utah as a state in which to process money for online gambling websites."

None of the defendants is in custody, but all are scheduled to appear in U.S. District Court in Salt Lake City Utah on May 30.

Tolman said the government is not seeking their detention pending the hearing because they aren't considered flight risks or threats to the community.

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