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(506) 223-1327        Published Tuesday, July 18, 2006, in Vol. 6, No. 141       E-mail us    
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An analysis of BetonSports case
Gaming ads strongest part of U.S. indictment
By the A.M. Costa Rica staff

The strongest allegations about executives of BetonSports in their criminal troubles appear to be that they advertised their Costa Rica-based gambling operation inside the United States.

The U.S. indictment made public Monday against seven BetonSports figures and four Florida associates alleges racketeering, conspiracy, fraud, tax evasion and money laundering.

Earlier story HERE!

Company executives also traveled to the United States to contract for advertising, which was placed on gambling Web sites, in magazines, on radio and on cable television and delivered via direct mail.

A company representative also made purchases inside the United States and had the items shipped to Costa Rica, including two Humvees, according to the indictment.

Other than the advertising, which seems to have been handled by other firms within the United States, the seven BetonSports figures seem to have a strong defense that they were physically located in Costa Rica or elsewhere, as were their companies.

For example, the United States says that BetonSports and affiliated companies committed fraud because they said they were "legal and licensed" but they were not legal and licensed inside the United States. However, BetonSports says on its corporate Web site that it is licensed by the Antigua and Barbuda Division of Gaming.

The money laundering charge, a very emotional allegation, is simply defined that company executives laundered money received as illegal wagers. But if the wagers were legal, the money laundering charge collapses.

The U.S. government also says that the offshore gambling companies failed to pay a U.S. wagering tax. But BetonSports does not have offices in the United States and it is listed on the London Stock Exchange. Even the indictment notes that it is incorporated in the Britain.

As part of the fraud allegation, the U.S. indictment said that BetonSports and its associated companies created the Offshore Gaming Association and the International Sportsbook Council and presented them as independent watchdog agencies, when in fact their purpose was to minimize loss via gambler complaints.

The indictment estimates that between Jan. 29, 2001, and Feb. 1, 2004, the gambling Web sites took in nearly $3.5 billion. It lists among other firms BetonSports in Antigua, Millennium, Jaguar, Infinity and Gibraltar, as well as BetonSports in Costa Rica.

The U.S. government said that 98 percent of the companies' bets were from the United States, but the company says on its Web site that it is seeking to beef up its presence in the Asian markets, which it says have great potential.

Finally the government alleges that BetonSports obstructed the U.S. tax laws by having gamblers there send money to third parties in other countries, like Ecuador, Antigua and elsewhere. If the company is not obligated to pay U.S. tax, this is a hollow allegation.

The case is being handled in the Eastern District of Missouri by the U.S. Attorney's office there. That state also is home to former U.S. attorney general John Ashcroft, who worked against online gambling and is a fundamentalist Christian.

There is no indication how Costa Rica will
Who was indicted?

By the A.M. Costa Rica staff

Who was indicted? According to the text of the indictment, these are the defendants.

Gary Stephen Kaplan, the founder and current 16 percent shareholder in BetonSports PLC.

Neil Scott Kaplan, Gary's brother, who handled the purchase of goods and services.

Lori Beth Kaplan Multz, Gary's sister, who arranged for advertising of the gambling Web sites and telephone services.

David Carruthers, chief executive officer of BetonSports.com and a director of BetonSports PLC.

Peter Wilson, media director for BetonSports.com.

Norman Steinberg, co-owner with Gary Kaplan of Internet and telephone service gambling Web sites known as the Millennium Group.

Tim Brown, Steinberg's son-in-law who worked in the Millennium Group.

William Hernan Lenis, William Luis Lenis, Monica Lenis and Manny Gustavo Lenis, who operated at least four Florida companies that promoted gambling Web sites and telephone services for gambling.

react to the indictment. Gary Stephen Kaplan, the main figure in the indictment and the founder of BetonSports lives here. If he is arrested, U.S. officials must show that he broke laws in the United states that are similar to crimes here. Gambling is not a crime here, but fraud, money laundering and conspiracy are, which may be why U.S. officials tacked them on the indictment.

If the U.S. charges prevail, the entire sportsbook industry here will be in jeopardy because nearly all do what the United States says BetonSports did criminally.

The indictment of the 11 individuals comes at a time when the U.S. Congress itself is uncertain if Internet gambling is covered by a 1961 wire act designed for U.S. bookies who made telephone calls.

The U.S. House passed a bill a week ago that made clear that Internet gambling was criminal, but the U.S. Senate still must approve the measure.

Perhaps the biggest sin of BetonSports was to be very visible. Chief executive David Carruthers has been campaigning for the United States to adopt a regulatory approach instead of prohibition. He even went so far as to write an op-ed piece last March for the Los Angeles Times.

For Costa Rica, this is a major development because thousands of young, bilingual Ticos work in the sportsbooks. BetonSports says it has 2,000 person on staff during high betting seasons.

BetonSports may have made serious errors when it marketed its gambling Web sites so aggressively. Sending gambling promotions via the U.S. mails, which the government alleged did happen, is a crime. And A.M. Costa Rica does not accept sportsbook and gambling ads because company owners believe to publish them would be contrary to state and federal laws in the United States.

But the United States, too, has strong protection for speech, even commercial speech like advertising. So the the odds are even money that this case will be in the appeals courts for years if there is a conviction.

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San José, Costa Rica, Tuesday, July 18, 2006, Vol. 6, No. 141

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Two murder suspects
bring total to four

By José Pablo Ramírez Vindas
of the A.M. Costa Rica staff

Four persons more have been detained as police wrap up their hunt for the persons who killed a Fuerza Pública officer at a police checkpoint near Cahuita on the Caribbean coast early July 9.

Saturday police detained Antonio Mendoza Mendoza, 46, in Valle de la Estrella, just 7 kilometers (4.5 miles) from the murder scene. The man is a former Nicaraguan guerrilla fighter, police said.

Sunday in Desamparados officers detained a 25-year-old man named Cristian Ampié Vargas.

They join in jail two men, Diego Artavia Muñoz and Luis Herrera Mora, who were detained last week.

Police also detained two women who face allegations that they provided help to the men after the murder.

The victim, Mario González González, died when he tried to check out two vehicles that he stopped at the Tuba Creek checkpoint. The officer did not know that the men in the vehicles were fleeing an armed robbery.

Officials said that Mendoza was identified during the shooting of González by another officer who was not harmed.

$1.9 million for repairs
in San Carlos, Guanacaste

By the A.M. Costa Rica staff

The nation's emergency commission has approved 950 million colons, some $1.9 million, for repair work in San Carlos and in Guanacaste.

Some 120 million colons ($233,000) go to build a bridge over the La Florida ditch in Ciudad Quesada. The emergency commission's board of directors also authorized spending 14 million colons ($27,000) to clean and channelize the Santa Rita in Florencia de San Carlos  and 8 million colons ($15,500) to restore a bank of the  Río San Rafael.

The  Comisión Nacional de Prevención de Riesgos y Atención de Emergencias took these actions after its president Daniel Gallardo took a tour of the area. The damage comes from heavy rains last year.

Some 185 million colons ($359,000) will go to recondition the Belén-Huacas-Villarreal highway and 588 million colons ($1.14 million) will repair 21 kilometers (123 miles) of Highway 155 between Belén-Villarreal.

Marijuana farm not
what he expected

By the A.M. Costa Rica staff

A landlord who rented a remote farm in Barú in Pérez Zeledón paid a surprise call and encountered what he said were marijuana plants.

A subsequent police visit led to the detention of the renter, an Australian identified as Alexandro Dimetropulos, 34.  Police said they found 72 plants a meter and a half (nearly five feet) tall.

The property was in an isolated sector, police said. The nearest home was a kilometer away, they said. The Australian, a tourist, had rented the home for seven months.

Taxi protests reduce
speed on main roads

By the A.M. Costa Rica staff

Taxi drivers protesting the legal status of drivers without permits caused congestion on the Intramerican highway Monday, and the protests are expected to continue all this week.

The taxi drivers, who are in a squeeze between higher fuel prices and fewer customers, want a law changed that permits the so-called porteadores. They characterize these drivers as piratas.

The permitted drivers drove slowly around Alajuela Monday, causing massive traffic jams behind them. Some jams were reported near Grecia and Esparza.

There may have been blockades elsewhere.

The drivers plan to bring their protest to the Cental Valley today in the vicinity of Grecia. Thursday they will be closer to the center of the city, they said.

Drivers are now paying more for fuel but the higher taxi rates have reduced passengers. So the pirate drivers who undercut them are a target.

Siquirres hospital pushed

By the A.M. Costa Rica staff

Lawmakers from the Provincia de Limón are pushing proposed legislation that would create a hospital for the Cantón de Siquirres and the population of Matina.

The idea has been talked about for 15 years. However, Jorge Méndez Zamora, a deputy from the Partido Liberación Nacional, supports the measure but says the other problem is locating medical specialists to the area.

Power outages announced

By the A.M. Costa Rica staff

San Antonio de Desamparados and Río Azul will have their electric power cut today while the Compañía Nacional de Fuerza y Luz S.A. conducts repairs from 7:30 a.m. to 4 p.m.

Wednesday the power outage will be in Pozos de Santa Ana and the center of San Antonio de Belén, according to the company.
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San José, Costa Rica, Tuesday, July 18, 2006, Vol. 6, No. 141

Delay in new immigration law to be until Dec. 1, 2007
By the A.M. Costa Rica staff

The Arias administration officially wants to put off the effective date of the new immigration law until Dec. 1, 2007.

That is the change the administration is going to ask the Asamblea Legislativa to make before the new law goes into effect in early August.

President Óscar Arias Sánchez and Federico Berrocal spelled out the reasons in a cover note to lawmakers.

Basically the administration does not have the resources or the manpower to handle the requirements of the new law, the cover note says.

Berrocal, who is minister of Gobernación, Policía y Seguridad Pública, said the immigration police would have to be expanded from the present 35 officers to 350 to do all that the law required.
And other parts of the Dirección General de Migración y Extranjería are not prepared to handle the fines that would be handed out to persons harboring illegal residents, Berrocal said. He added that there was some question of the constitutionality of the law.

In fact, the Arias administration wants a wholesale rewrite of the law which some feel is too hard on illegal aliens.  The new law also criminalizes trafficking in persons, the so-called coyotes who help people immigrate to the United States.

The previous security minister, Rogelio Ramos used to complain that officials had to release coyotes because there was no law against the practice, which is universally deplored. President Abel Pacheco supported the new law.

The request to the legislators was expected. But the actual date of Dec. 1 is new information. The lawmakers are likely to comply.

Dog days won't stick around long this year due to Pacific disturbances
By the A.M. Costa Rica staff

Thanks to weather disturbances in the Pacific, the Dog Days of July will be more like puppy days. The Instituto Meteorológico Nacional says the dog days, called  canículas in Spanish will not last long this year and the weather will be wetter than normal.

Dog Days are better known high up in the Northern Hemisphere because they are linked to the appearance of Sirus, the Dog Star, in the heavens. They are the hottest and most humid time of summer. The period
 usually begins after July 15 here.

The Caribbean will have a chance to dry out a little bit today as the Pacific slope and northern zone get the brunt of the rain.

The Comisión Nacional de Prevención de Riesgos y Atención de Emergencias has issued an alert because the low pressure over the country is expected to intensify encouraging rain. So the commission has declared the alert for the Central Pacific, the Central Valley and Pococí in the Provincia de Limón.

RACSA ready to sign customers for wireless cloud at Escazú, Santa Ana
By the A.M. Costa Rica staff

Radiográfica Costarricense S.A., the Internet provider, says it is ready to take signups for its high-speed  WiMax wireless service.

The service is available in an eight kilometer radius of Cerro Abra, including Escazú and Santa Ana. The wireless station on the mountaintop catches the signal and carries it to the company's servers.

During the rest of the year the company known as RACSA will be installing radio base stations from Alajuela on the west to Tres Rios on the east. The
 company is motivated because the one-time monopoly is now in competition with its parent firm, the Instituto Costarricense de Electricidad and its Acelera services via the phone lines.

The company says that users of the new system just have to install a small antenna on the exterior of their building and a connection to the computer.

Speeds will be from 512 kilobits per second download and 256 kps upload to 2 megabits per second download and 1 mps upload. More information is available here:

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San José, Costa Rica, Tuesday, July 18, 2006, Vol. 6, No. 141

11 persons associated with BetonSports indicted
Twin U.S. actions seek to end online betting
By the A.M. Costa Rica staff
(Posted at 6 p.m. Monday, July 17, 2006)
The U.S. government moved Monday to isolate bettors in that country from BetonSports, the Costa Rican online gambling operation. It also unsealed a complex 22-count criminal indictment against 11 individuals and four corporations, including Costa Rican residents BetonSports chief executive David Carruthers, 49, and Gary Kaplan, whom they identified as the founder and shareholder of the firm.

In a parallel action, a federal judge, responding to a civil injunction request, ordered four U.S. telephone companies to cut off telephone calls to BetonSports here in Costa Rica and told the gambling firm to return to U.S. bettors money held on their behalf. The civil injunction also told the company to put notices on its Web sites telling U.S. residents they could not place bets or gamble.

The U.S. government also is seeking $3.3 billion in back taxes on wagers taken from the United States and $4.5 billion more from Kaplan and other defendants.

Arrests were made in the United States. FBI and Internal Revenue Service agents detained Carruthers Sunday afternoon at Dallas international airport as he was changing planes on a flight back to Costa Rica from England.

Neil Scott Kaplan, 40, identified as Kaplan's relative, is in custody in Ft. Pierce, Florida, said the U.S. Attorney's Office in Missouri.

A man identified as Tim Brown was arrested near Philadelphia, Pennsylvania, and was to be released on $150,000 bond Monday. Carruthers faces a detention hearing Friday morning at which bail is likely to be a topic. He is an outspoken advocate of regulation of sportsbooks instead of prohibition. He went before a federal magistrate Monday afternoon in Fort Worth, Texas, to set the date of the detention hearing.

The criminal indictment alleges that Gary Kaplan and Norman Steinberg, as the owners and operators of Millennium Sportsbook, Gibraltar Sportsbook, and
North American Sports Association, took or caused their employees to take bets from undercover federal agents in St. Louis, who used undercover identities to open wagering accounts.

The indictment also alleges that Kaplan and a firm named Mobile Promotions illegally transported equipment used to place bets and transmit wagering information across state lines and that DME Global Marketing and Fulfillment shipped equipment to Costa Rica from Florida, for BetonSports.com.

Also charged are William Hernan Lenis, Monica Lenis and Manny Gustavo Lenis, owners and operators of the Florida  companies, and William Hernan Lenis’ son, William Luis Lenis, according to the U.S.  Attorney's office in the U.S. state of Missouri.
Despite the federal action, a spokesman for BetonSport in Mall San Pedro said late Monday afternoon that the company was working normally. The spokesman said that lawyers had been consulted.

The company says BetonSports.com is one of the largest licensed and publicly traded online wagering companies in the world. Many of its 2,000 employees work at the Mall San Pedro offices. The company occupies seven floors there.

Online gambling and sportsbooks are a major source of jobs for bilingual Costa Ricans.

Police arrested four employees of Mobil Production outside Tampa's Raymond James Stadium in October. They were soliciting wagers ranging from $25 to $100,000, said a report in Online Casino News.

Carruthers was quoted at the time saying that the betting is completely legal because the bets are placed in Costa Rica and other offshore sites, where gambling is allowed. Police disagreed.

"Illegal commercial gambling across state and international borders is a crime," said U.S Attorney Catherine L. Hanaway of the Eastern District of Missouri in announcing the indictment. "Misuse of the Internet to violate the law can ultimately only serve to harm legitimate businesses. This indictment is but one step in a series of actions designed to punish and seize the profits of individuals who disregard federal and state laws."

Warrants have been issued for Gary Kaplan and others who have not been arrested, including Lori Kaplan Multz and Peter Wilson, identified as media director for BetonSports.com.

The broad racketeering conspiracy indictment alleges that the defendants agreed to conduct an enterprise through a pattern of racketeering acts, including repeated mail fraud, wire fraud, operation of an illegal gambling business and money laundering.

It is a tricky legal question if Costa Rica will honor arrest warrants when gambling is not illegal here.

The charges are the result of a joint investigation by Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. The Florida Department of Law Enforcement, the Tampa Police Department, the Jacksonville, Florida Sheriff's Office and NFL Security and NCAA Enforcement Office also assisted in the investigation, the U.S. Attorney's Office said.

Volcano in Ecuador forces evacuation of 1,600 residents to shelters
By the A.M. Costa Rica wire services

Ecuador's Tungurahua volcano has spewed gas and ash for a fourth straight day, forcing nearby residents to evacuate their villages.

Emergency officials said Monday that at least 1,600 people have taken refuge in shelters.

Tungurahua, 130 kilometers (about 80 miles) south of Quito, has covered farmland and villages with volcanic
ash. The president of a farmer's association says area farmers are losing their crops.

The 5,000-meter-tall (16,400-foot) volcano sent huge columns of ash into the air in 1999, forcing the evacuation of 17,000 residents of the town of Banos to the north. Historical eruptions of the volcano have been accompanied by strong explosions and by lava flows that reached populated areas.

The last major eruption was in 1918.

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Jo Stuart
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