Founder of offshore business in Antigua jailed

Acting US Attorney Michael Reap said that the case should serve as a warning to others who might choose to “defy the laws of the United States on such a grand scale”. (File photo)

ST JOHN’S, Antigua, November 4, 2009 – The founder of an illegal offshore online business, which had been operating in Antigua and Barbuda, has been jailed in the United States and ordered to forfeit millions of dollars after admitting to federal racketeering charges.

Gary Stephen Kaplan, who set up BetOnSports in the late 1990s, was sentenced this week to 51 months in prison – the maximum he could face under a plea agreement reached on August 14th – and had to forfeit US$43.65 million in criminal proceeds to the United States government.

An additional amount of approximately US$7 million has been forfeited in related proceedings, bringing the total forfeiture in the case to over US$50 million.

Kaplan had faced a 22-count indictment that included conspiracy to violate the Wire Wager Act which prohibits the use of a wire communication facility to transmit bets across state or foreign borders; conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (RICO); interstate transportation of gambling paraphernalia; interference with the administration of Internal Revenue Service laws; and tax evasion.

In addition to having an operation in Antigua, which has been in liquidation for about two years, the 50-year-old Kaplan also set up business entities offshore in Aruba and eventually Costa Rica to provide sportsbook services to US residents through Internet websites and toll-free telephone numbers.

Acting US Attorney Michael Reap said that the case should serve as a warning to others who might choose to “defy the laws of the United States on such a grand scale”.

“Kaplan’s business model itself was built on a wager that the U.S. could not and would not enforce its anti-sports book laws to reach Kaplan…Kaplan lost that wager,” he said.

Roland Corvington, Special Agent in Charge of the Federal Bureau of Investigations (FBI) in St Louis, added: “In addition to being in prison, hopefully some of the money forfeited will go to useful purposes such as fighting other Internet-related crimes, such as catching child predators who think they can hide online”.

Kaplan’s sentencing concluded a lengthy investigative and prosecution effort by several law enforcement agencies, including the IRS and the FBI. Kaplan has been in custody without a bond set since his arrest in March 2007.