As Betonsports faces meltdown, shareholders in the online gambling firm are considering taking legal action against the company’s advisers – Evolution Securities and Baker Tilly.
The company was brought to the London stock market two years ago, but institutional investors are unhappy that the history of Betonsports founder Gary Kaplan was not made clear in the company’s offer document.
Betonsports‘ representatives have insisted that Kaplan was not a director of the company, so it was under no obligation to detail his past, which includes a brush with the law over gambling offences in New York in 1993.
Kaplan, who is wanted by the US Department of Justice, faces possible charges of fraud and racketeering. He is said by those close to the company to have left Costa Rica for Israel.
One of the biggest institutional shareholders in Betonsports said: ‚It [legal action] is possible given that certain information was not circulated at the time of the float. What’s known now should have been known then. It’s a disgraceful situation that’s hard to explain away but individually it will be hard to get anywhere. Collectively, it’s possible.‘
Betonsports‘ float was handled by Evolution Beeson Gregory, now Evolution Securities. Baker Tilly was its auditor and reporting accountant. Both firms have said they supplied all the information that was required of them to the relevant listing authorities.
David Carruthers, the former chief executive of Betonsports, already accused of racketeering and fraud, has been incarcerated in a Missouri jail. His lawyers and family are believed to have raised USD 1m bail. Carruthers has pleaded not guilty to the charges and should be released from jail tomorrow.
Last Friday the firm announced it was closing down its US business, which generated most of its profits. Industry insiders say the closure of its US business will be a huge problem for the long-term viability of the company. Many predict the company will see its share price become worthless if it resumes trading. Its shares have been suspended for three weeks since the US authorities arrested Carruthers in Texas.
Betonsports hopes its decision to stop taking US bets will ward off any further legal action by US authorities.
American law makes it illegal for companies to take sport bets from US citizens via the telephone and internet.
Betonsports‘ withdrawal from the US will result in the loss of 800 jobs and will see it leave Costa Rica and Antigua. The company will now attempt to boost its presence in the potentially lucrative Asian market, having last year paid GBP 17.2m for Easybets.