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Eight Busted for Involvement in California Gambling Ring

31 July 2006

A new case involving the use of the Internet for illegal gambling activities has emerged in the United States this week, but the operation of this most recently busted gambling business appears to be far different from that of BetonSports.com. The prosecutions of individuals from the two separate businesses are in no way related.

Following an investigation by the U.S. Internal Revenue Service (IRS), eight individuals in this latest case were arrested on Wednesday for their roles as agents in a sports wagering business. Customers of the business placed wagers via telephone as well as the Internet at www.bettheducks.com, but apparently funds were personally given to or delivered to agents as cash or checks rather than automatically transferred at the time of the wager via wire transfers or payment processors. The agents of the business are accused of collecting the funds from customers and delivering the funds to runners, who then transmitted the funds to a designated beneficiary in Costa Rica.

A complaint filed in the Northern District of California charges defendants Jenaro R. Mejias, Tony Ferretti, Dallas Affolter, Houshang Pourmohamad, Ed Attanasio, David Volkman, Norm Foisy and Ray Vargas with conspiracy to conduct, finance, manage and supervise an illegal gambling business in violation of 18 U.S.C. Section 371 and conducting, financing, managing and supervising an illegal gambling business in violation of 18 U.S.C. Section 1955. Each count carries a maximum statutory penalty of five years imprisonment, a $250,000 fine, three years supervised release and a $100 special assessment. The complaint also charges the defendants with conspiracy to launder money in violation of 18 U.S.C. Section 1956, each count of which carries a maximum statutory penalty of 20 years imprisonment, a $500,000 fine, five years supervised release and a $100 special assessment. All of the individuals were arrested last week and released on bond.

The complaint dates the origin of the gambling business at no later than September 2002 and alleges that it continued until June 2006. The information used by IRS investigators to identify the agents was obtained following the arrest of David Lee Duckart, alleged to be the acting bookmaker in the business. Investigators searched Duckart's residence in San Ramon, Calif. on June 22, 2006, and a complaint was lodged against him the following day.

Duckart is charged with conducting, financing, managing, supervising and directing an illegal gambling business in violation of 18 U.S.C. Section 1955, conducting an illegal gambling business in violation of 18 U.S.C. Section 1956(a)(2)(A) and engaging in illegal bookmaking in violation of Section 337a of the California Penal Code.

The search of Duckart's residence on June 22 resulted in the seizure of $768,889 in cash, three computers, and a substantial number of documents. Investigators have acquired a list of cash deposits to Duckart's account at Bank of America totaling $358,518 as well as a list of wire transfers from the bank account to Costa Rica, totaling $252,950. Other documents obtained by investigators include pay-owe sheets containing customer names and wagers and e-mails containing gambling-related information that referenced Duckart's agents and other employees.

The complaint filed last week against the eight agents reveals that since the search of his residence, Duckart has been interviewed by government investigators on numerous occasions and has identified a total of 22 agents and three runners, as well as individuals based outside the United States, who were involved in the operation of his gambling business, which means that only slightly more than one third of the agents in the business have been pursued by authorities so far.

According to the complaint against the agents:

Duckart described the function of "agents" in his gambling business as being responsible for a group of players/gamblers; collecting funds to pay for their bets and wagers placed via the Internet or a toll-free number, with one or more persons in Costa Rica participating in this illegal gambling business; delivering these funds to a "runner" with the expectation and understanding that these funds would be delivered to Duckart; making payment of gambling winnings to their players; and receiving a commission from Duckart based on gambling losses of their players.

The complaint against the agents also reveals that investigators received much information from a "cooperating source" who worked as an agent for Duckart. The cooperating source said that each week Duckart gave him a list of dollar amounts to be picked up from various persons. The cooperating source said the single largest amount of money he picked up was $80,000 from defendant David Volkman.

The eight defendants listed in the complaint allegedly dealt with a combined 259 customers. Jenaro Mejias had the most with 60, while Houshang Pourmohamad had the least with 14.

This is not the first time Duckart has been charged with a gambling-related offense; he has been on pretrial release from charges related to operating an illegal gambling business since 1998.

The Duckart case should not necessarily be interpreted as symptomatic of a nationwide crackdown on Internet gambling. Duckart's operation was in many ways inherently different from that of BetonSports and other offshore gambling businesses in that it allegedly used agents and runners based within the United States to collect and then launder money. It was also much smaller in scale. Typical online gambling sites do not use runners and agents but instead facilitate automatic payments of funds to and from customers by using wire transfers and alternative Internet-based payment processors such as NETeller, Firepay and Citadel.

It is not known whether Duckart's Web site, www.bettheducks.com, was licensed by the government of Costa Rica. Kevin V. Ryan, the U.S. Attorney who announced last week's arrests, filed an indictment against Gold Technologies in 2003 on charges related to illegal online gambling.

Click here to view last week's complaint against the eight agents.

Click here to view last month's complaint against Duckart.

Eight Busted for Involvement in California Gambling Ring is republished from iGamingNews.com.
Bradley Vallerius

Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com
Bradley Vallerius
Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com