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David Carruthers was the Chief Executive Officer of Betonsports up until last month. In July the Justice Department arrested Carruthers in Dallas Fort Worth airport when he was changing planes on the way from London to Costa Rica. Carruthers up until then had been a very vocal advocate of internet gambling, publishing several articles in newspapers around the United States calling on Congress to legalize and regulate the industry, rather than ban it outright. Since his arrest Betonsports has been unceremoniously fired from the company he had run for the past six years. Carruthers was known for being the man who made Betonsports the success that it was. He had left his job as area operations manager of 40 Ladbrokes betting shops in the Midlands, England after 24 years at the company to join Betonsports six years ago. In the four years before BetonSports' flotation, he saw profits grow by more than 35% a year. Betonsports now has a 22-count indictment against the company. The main focus of the indictment is Gary Stephen Kaplan, the founder and partial owner of Betonsports. When Carruthers brought Betonsports for initial public offering one of the clauses was that Kaplan would no longer be a majority holder in the company. He was lowered to the position of partial shareholder and advisor. BetOnSports PLC is now being prosecuted by U.S. Attorney Catherine Hanaway in St. Louis. Betonsports allowed players from the United States to place sports bets via telephone. The company was supposedly advised that as they were located off-shore they were not doing anything illegal. However, the US 1961 Wire Act clearly states "Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both." While there is a debate on whether the internet is included in the Wire Act, as the internet wasn't created until well after 1961, there is no debate that telephone betting is illegal. Most of Betonsports clientele came from the US. When the indictment came in and Carruthers was arrested Betonsports was forced to close their operations to the US market. This resulted in the company laying-off 800 of their 1,000 people staff. They have been de-listed from AIM (the London small stock exchange) and their website has been temporarily down. There are rumors abounding that the company is closing, rather than just restructuring. Kaplan has been missing in action according to every media outlet. Some say he is still in Costa Rica, others say he's escaped to Israel. I doubt he's gone to Israel as there was a war going on over there when the arrest of Carruthers was made. Carruthers has since been freed on a $1 million bail bond after a month behind bars following his arrest on racketeering, tax evasion, and fraud charges. Now he will be living in an upscale hotel with a dedicated phone line in the suburb of Clayton instead of a luxurious prison cell. The bail money did not come from Betonsports, however Carruthers' attorney Scott Rosenblum wouldn't mention where the money came from. Carruthers had a single question for the judge during the hearing, asking "The house incarceration: Is that 24 hours a day?" The judge confirmed that it was. One would think that Carruthers would be a flight risk, considering that Kaplan still hasn't been found and he isn't a US citizen. However, that would be ignoring this mans love of the spotlight and his desire to be the champion of legalizing internet gambling in the United States. "He's looking forward to responding to these charges in court," Rosenblum said. I wouldn't mind being in the courtroom the day Carruthers takes the stand. This is a man who loves to be on the soapbox for this industry. If there was ever a person willing to be a martyr for online gambling then he would be it. The case against Carruthers is strong. Had Betonsports only allowed for bets via the internet then perhaps he would stand a chance. Carruthers has pled not guilty. The cost for his legal defense was offered to be paid by Betonsports, which is a nice offer but not one likely to get him any sympathy in the court. As such most likely he will bear the brunt of his legal costs. Betonsports has been ordered to pay people back their deposits by US Attorney Catherine Hanaway. How and when Betonsports intends to do that is still up in the air. I've read articles saying Carruthers career is over, that he has no country since he's become the US's "whipping boy." These opinions couldn't be further from the truth. He underestimated the guile the US has towards internet gambling, it's true. However he still has an amazing track record. He grew a small company into a monster through his own ingenuity and hard work. If he did it once, he can do it again. Just imagine what he could do if the industry was regulated instead of banned in the United States. Industry specialists are saying this will be a landmark case for the US. I disagree. I think the US is afraid to go after a real controversial case, like an online casino owner who only allows for bets to be placed via internet. While the Department of Justice claims that this is clearly illegal it obviously isn't clear at all, as Congress is doing their best to clarify what is and isn't legal right now through HR 4411 and HR 4777 (two anti-internet gambling bills). Instead they are going after a rather obvious choice, someone who is vocal and has without a doubt broken a law. Nothing very land-mark about that. Posted on: August 16, 2006
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