David Carruthers to plead "not guilty" in St. Louis hearing

David Carruthers Fort Worth, Texas attorney Tim Evans says that his client will plead "not guilty" today in a St. Louis federal court.  Carruthers and several others were indicted two weeks ago for charges ranging from money laundering to racketeering to violation of an obscure 1960's "wire act".  Carruthers is the former CEO of the number two largest online gambling firm, BetonSports.com, which is also named in the indictment.

The St. Louis Post-Dispatch reported early Monday that lawyers for BetonSports might not even show up for the hearing.  This would conflict with previous company statements suggesting BoS had been cooperating with US prosecutors by shutting their website down.

An industry insider who said his job was at risk if he publicly identified himself said that executives at BetOnSports have discussed ignoring federal prosecutors' biggest effort in years to shut down offshore gambling and sports betting, according to the Post-Dispatch.

"Industry executives could simply avoid coming to the U.S. and risking the fate of former BetOnSports CEO David Carruthers, who was arrested in the Dallas airport July 16 while on his way to a connecting flight to Costa Rica.

"Carruthers was fired last week by the company, which said he would be "unable to perform his duties" while in federal custody. The company has also stopped accepting U.S. bets and asked the London Stock Exchange to suspend trading in its shares."

Catherine Hanaway, U.S. attorney for the Eastern District of Missouri, said in an interview Thursday that is BetonSports chooses to ignore the court efforts, "There are further steps that could be taken down the line."

Lawyers did not show up for a status conference in the case last week. BetOnSports spokesman Keith Smith said Friday that the company, which has its headquarters overseas, had not yet been served with legal papers.

The company has been claiming it stopped taking wagers from US citizens and shut down all its US-focused websites as a means of complying with the court order, however, BetonSports is yet to return customer deposits and has issued only one "official" terse statement since the indictments were announced.  That statement included a termination of Carruthers and denial the current Board of Directors had anything to do with a 2002 party the company's founder hosted where a London newspaper reported that hookers were flown in to accommodate guests fetishes.

Today's court hearing has been called to discuss a restraining order that would ban BetOnSports from accepting business from the U.S., provide refunds for customers and force the company and executives to give up their business records, $4.5 billion and other property.

The federal government claims in court filings that BetOnSports took in more than $3.5 billion just from 2001 to 2004, by using more than 700 Web addresses and dozens of toll-free numbers to take bets. Federal investigators have reviewed company files, placed undercover bets and tracked the bets of 18 gamblers who used Western Union to send money, including two in the St. Louis area who sent a total of $40,000.

Gary Kaplan, founder of BetonSports, whereabouts remain unknown.  He was also named in the indictment but seemed to be aware of an ongoing investigation since 2003.

An associate of Kaplan's told Gambling911.com last year:  "G (Gary) has not traveled back to the U.S. for three years now.  He will not be going back to the United States."

The associate also implied Gary knew his name could be among those on a "government watch list" without elaborating further.  Prior to this time, Kaplan would frequent the States without incident. 

Gary's brother Neil, who is also named in the indictment, is known to have left the company all together shortly after the investigation began.  Tim Brown is mentioned in the indictment reportedly to "flush out his father-in-law, Norman Steinberg" - also named in the indictment - according to industry sources.  Brown's role in the company was "akin to that of a janitor" and he left entirely two summers ago.  Peter Wilson, who dealt mostly with radio advertising placements and some other media outlets, was the last known person to be actively employed by BetonSports outside of Carruthers named in the indictment.  He left the company only within the last three months.

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Christopher Costigan, www.gambling911.com

Originally published July 31, 2006 10:14 am EDT