BoS and US Reach Terms in Civil Case

The civil case against BetonSports (BoS) is officially closed as of today. The company agreed to permanently shut down United States-facing operations, including phone lines and Web sites, refund the money owed to customers and cooperate with government investigators.

Attorneys for BoS said on Monday that accepting the settlement is in no way an admission of guilt to the charges brought against them this summer.

The trouble began on July 17 when then CEO David Carruthers was arrested at Dallas-Ft. Worth airport en route to Costa Rica. During his arraignment it came to light that he, the company and 10 other individuals associated with the business, including founder Gary Kaplan, were indicted and charged with conspiracy, racketeering and fraud in offering bets on professional and college sports to U.S. residents.

The indictments stemmed from a three-year federal investigation (between 2002 and 2005) out of the Eastern District of Missouri, during which the government alleges BoS and associated companies took in $4.6 billion from U.S. residents.

In conjunction with the criminal indictments, the U.S. filed a temporary restraining order (TRO) against BoS on July 17, preventing them from taking U.S. wagers. BoS shut down its site the next day and has been down since leaving customers and shareholder in limbo.

But after four months federal prosecutors have reached a settlement with the embattled company that orders the return of funds to U.S. customers.

In addition, according to the order of permanent injunction, BoS is permanently barred from taking bets from the U.S., either through its Web site or over the phone, and cannot advertise any gambling activity within the U.S.

Further, the company must post a message on each of its Web sites indicating that it no longer accepts U.S bets and provide an automated message to the same effect on each telephone wagering service.

One other condition of the injunction requires BoS to place the following statement in a full-page ad in a national newspaper:

BETONSPORTS, WHICH OWNS AND OPERATES THE LISTED INTERNET WEB SITES AND TELEPHONE BETTING SERVICES [insert list], IS NO LONGER ACCEPTING WAGERS FROM PERSONS IN THE UNITED STATES. IT IS A VIOLATION OF UNITED STATES LAW TO TRANSMIT SPORTS WAGERS OR BETTING INFORMATION UNSING INTERSTATE OR INTERNATIONAL TELEPHONE LINES. IF YOU HAVE A WAGERING ACCOUNT WITH BETONSPORTS PLC SPORTSBOOK OR TELEPHONE WAGERING SERVICE, PLEASE CALL [TOLL FREE TELEPHONE NUMBER] TO ARRANGE A REFUND.

Within seven days, the company must also give federal investigators a list of their financial assets and company records.

In a prepared statement today following the Order of Permanent Injunction, the Board of BoS said that while the company agrees to the conditions of the order, it does not admit to or contest any of the allegations contained within the complaint.

"The company is an investment holding company and has not itself undertaken any gaming activities," the board said. "Furthermore most of the alleged offences in the complaint took place before the company started to trade in July 2004."

The board also said that while its Antiguan subsidiary continues with its efforts to repay customers, this remains dependent on collection of monies from payment processors and other debtors.

Meanwhile, BoS has taken other steps to settle up with its customers. The company announced today the sale of its Asia-facing Hooball sports book and casino back to its original founders for a cash sum of $2.25 million. BoS acquired Hooball in May 2006 for an initial consideration of $22 million, with $10 million paid in cash, and incorporated it into the BoS-owned, Malaysia-based EasyBet infrastructure.

Lawyers for both parties have said that settlement of the civil case against BoS has no bearing on the criminal case which is set to begin in January. However, the company is working toward a positive outcome.

"Negotiations with the DoJ continue with the aim of eliminating the criminal charges against the Company," the board said.

Click here to view a copy of the Order of Permanent Injunction.