Gary Stephen Kaplan, BetOnSports Founder Sentenced on RICO Charges; to Forfeit $43 Million

Gary Stephen Kaplan, founder of BetOnSports, a large illegal offshore sports wagering business, was sentenced to 51 months in prison on multiple federal charges yesterday.

Pursuant to a complex plea agreement, on August 14, 2009, Gary Stephen Kaplan, 50, entered pleas of guilty to charges of conspiracy to violate the RICO statute, conspiring to violate the Wire Wager Act, and violating the Wire Wager Act.

The Complaints Against Gary Stephen Kaplan, Betonsports PLC, Et Al –
As part of the plea, Kaplan has forfeited to the United States $43,650,000 in criminal proceeds. An additional amount of approximately $7 million has been forfeited in related proceedings, bringing the total forfeiture in this case to over $50 million.

Kaplan admitted that beginning in the mid to late 1990’s, he set up business entities offshore in Aruba, Antigua and eventually Costa Rica to provide sportsbook services to U.S. residents through Internet websites and toll-free telephone numbers. He founded, operated, and controlled, with other co-conspirators, the enterprise known as “BetOnSports.” BetOnSports advertised heavily in the U.S. to solicit U.S. residents to place sports wagers by telephone and over the Internet. BetOnSports-related entities controlled toll free numbers and domain names advertised by BetOnSports. Technologically, Kaplan’s toll-free telephone lines terminated in Houston, Texas or Miami, Florida and then were forwarded to Costa Rica by satellite transmitter or fiber-optic cable. Some of Kaplan’s web servers were located in Miami and were remotely controlled from Costa Rica. U.S. residents became customers of BetOnSports by depositing funds on account and placing wagers over U.S. toll-free telephone lines and via the Internet using the deposited funds. Funds were sent from the U.S. customers to BoS operations outside the U.S. and BoS sent winnings from outside the U.S. to its U.S. customers.

BetOnSports was highly successful and attracted a large number of U.S. customers. By 2004, the BetOnSports organization’s principal base of operations in Costa Rica employed approximately 1,700 people. During the year ended January 31, 2004, BetOnSports had close to one million registered customers, and accepted over 10 million sports bets in a cumulative gross amount that exceeded one billion dollars. In mid-2004, Kaplan made a successful public offering of the stock of BetOnSports on the London Alternative Investment Market that netted him over $100,000,000. Those funds eventually found their way into various Isle of Jersey trusts which invested the funds in Swiss bank accounts.

Kaplan has been in custody without a bond set since his arrest in March, 2007.

Defendants Norman Steinberg and Gregory James Haggard remain at large.