Antigua files injunction against American overkill

According to Gambling911 insider Christopher Costigan, BetonSports.com recently liquidated its luxurious Costa Rican headquarters to help pay the salaries of laid off staff - at 15 per cent of salary owed. Meanwhile, Operations Manager Clive Archer and board member Richard Creed have been seen at gambling conferences in Europe, talking about Carruthers' role in BetonSports' downfall.

Which brings us back to all that missing money - just where did it go, and what does American regulation have to do with it?

As always when things become criminalized, rather than merely regulated and controlled, it went underground.

Show me the money

After the passage of the Patriot Act, financial transactions were coded to make it easier for the American government to classify and track potentially suspect capital flows. A perverse byproduct of this part of the law (which was designed to track terrorist financing) was that industries in legal limbo like gambling that didn't want to endanger their clients under American law turned to unregulated payment processors - who, it turns out, are mostly located in the Middle East. Costigan also reported in an email to El Reg that some money could be tied up with marketing affiliates, who refuse to give it back. However, none of that explains what happens to the deposits that originally belonged to Betonsports customers.

And that brings us full circle to the Antigua problem. Although BetonSports was listed in London and had its operational headquarters in Costa Rica, most of the American action that is the subject of the indictments went through its affiliate, BOS Antigua, which is why Antiguan authorities stepped in with an injunction of their own last week. The Financial Services Regulatory Commission of Antigua (FSRC) noted the apparent chaos surrounding customers' accounts and sought to remind the juggernaut to the north that Antigua retained jurisdiction over BetonSports' Antiguan operations.

Mr. Lebrecht Hesse, the Chairman of the FSRC, stated that "we believe that the United States should step aside and ensure that our regulators can enforce and oversee the application of the laws of Antigua and Barbuda to the orderly dissolution of BetonSports. We are disappointed that the United States efforts to prohibit cross-border competition in gambling and betting services have led to the disruption of a once-healthy and robust service provider, but we are just as adamant that our jurisdiction be respected in the interests of consumers and others."

Currently, the Carruthers case is in the discovery phase of the trial, which in the American system is when parties exchange evidence. That phase will not end until late January at the earliest, and it could well drag on longer than that, due to the complexity of the case and the difficulty tracking some of the capital flows through some of the less scrupulous payment processors. Furthermore, the gag order has allowed the US Attorney’s office to avoid fielding nasty questions about how much if any is left for account holders. To what extent the British holding company BetonSports PLC may be held liable as the mothership connection for this mess has yet to be even discussed.

Through it all, David Carruthers, once the respectable hood ornament of the industry, has remained the scapegoat for American prosecutorial zeal. Fired from his position as CEO after his arrest, the former Ladbrokes man remains in home detention in St. Louis, awaiting trial.

On the home front, American institutional investors like Goldman Sachs or Morgan Stanley will be insulated from any liability due to their lowly shareholder status.

Gary Kaplan, the New York bookie who founded the company and remains its largest shareholder, is nowhere to be found.

And what happens now that the DOJ has taken a legitimate corporation and reduced it to fugitive status? Will players who were previously paid without a hitch get anything back at all? With the former board of directors apparently partying it up across Europe, and much of the money now in the Middle East, good luck. We wouldn't bet on it. ®

Burke Hansen, attorney at large, heads a San Francisco law office.