BetOnSports, one of the largest online betting and gambling companies in the world, will ignore a federal criminal prosecution and civil case aimed at shutting its billion-dollar U.S. operation, a federal prosecutor said in court Monday.
BetOnSports lawyers failed to show up Monday morning for arraignment of the company on criminal charges that include mail fraud, wire fraud and racketeering.
They also did not attend a civil hearing in the afternoon. There, federal prosecutors asked a judge to make permanent a temporary order that bans the company from doing business with U.S. customers and seeks the forfeiture of more than USD 4.5 billion and other property.
Marty Woelfle, of the Justice Department’s organized crime and racketeering section, in Washington, said Steve Cohen, a New York lawyer hired to advise the company, told her Bet OnSports would not answer the charges.
Reached later by phone, Cohen said, „I can’t comment on what position, if any, the company intends to take in the litigation.“ He said he was advising the company „on certain issues,“ including jurisdiction.
The case represents the largest prosecution of an Internet gambling company ever, said U.S. Attorney Catherine Hanaway. She noted the huge amount of money flowing overseas and officials‘ fears it could be used for criminal enterprises or terrorism.
BetOnSports allowed U.S. gamblers to bet and gamble billions of dollars even though the company knew it was illegal, prosecutors have charged.
Hanaway would not comment on the next step. She said the company and its executives could face additional penalties, including arrest warrants for contempt of court if they come onto U.S. soil.
BetOnSports is listed on the London Stock Exchange. It has offices or equipment in Costa Rica and Antigua, where gambling is legal, so there is no extradition of participants to countries where it is not.
Hanaway said it was very rare for someone to simply ignore a federal prosecution. „They’re just doing what they have been doing,“ she noted. „I don’t think it’s surprising that they would continue to.“
But Hanaway said her office achieved a „very significant step forward“ by getting the company to shut down its hundreds of Web sites to U.S. consumers.
Sam Buell, a Washington University Law School associate professor, said prosecutors could seek fines against the company for not showing up. If the fines built to an „economically significant“ level, it could strengthen their hand in pursuing the company or its executives.
The case could also become a major battle over the issue of the jurisdiction that U.S. courts hold over foreign companies that do business here, Buell said.
BetOnSports spokesman Kevin Smith said the company had not been served with any of the paperwork from the civil or criminal case.
Federal prosecutors said it was faxed to London and Costa Rica and given directly to Bet OnSports CEO David Carruthers upon his arrest in a Texas airport on his way to a connecting flight to Costa Rica earlier this month. The company has since fired Carruthers.
He appeared in court Monday afternoon and pleaded not guilty.
Carruthers‘ Texas lawyer, Tim Evans, said he expects to work out a deal to free Carruthers on $ 1 million bond with a condition that he stay in the St. Louis area and wear a GPS tracking device.
All of the other criminal defendants pleaded not guilty either in person or through lawyers, including one other company, DME Global Marketing & Fulfillment Inc.
A lawyer for DME Global, Paul D’Agrosa, said lawyers or representatives of two other companies that had been charged, Direct Mail Expertise Inc. and Mobil Promotions Inc., were unlikely to show up because the companies had gone out of business.
DME Global and the other companies are accused of providing advertising and promotional services and helping sign up customers for BetOnSports.