Ex-BetonSports CEO sentenced to 33 months in prison after pleading guilty, cooperating in case

By Jim Salter, AP
Friday, January 8, 2010

Ex-BetonSports CEO gets prison time in plea deal

ST. LOUIS — A man who helped build one of the world’s largest Internet gambling companies, only to see it crumble after an indictment by U.S. prosecutors, was sentenced to nearly three years in prison Friday on federal racketeering charges.

David Carruthers pleaded guilty in April to racketeering conspiracy. Authorities said Carruthers is cooperating in the case against others associated with his company, BetonSports, and has agreed to testify against them if necessary.

Carruthers, 52, was director and chief executive officer of BetonSports, an offshore sports wagering business based in Costa Rica. His conviction and 33-month prison sentence “should send a message to any foreign business conducting illegal activities in the United States, that geography does not render it untouchable,” said Steven Holtshouser, an assistant U.S. attorney based in St. Louis.

The attorney for the British-born executive, Scott Rosenblum, did not return a phone call seeking comment.

Carruthers admitted in his guilty plea that the company falsely portrayed Web-based gambling as legal and caused customers to lose millions of dollars. Federal sentencing guidelines provide for up to 20 years in prison, but prosecutors recommended leniency in return for Carruthers’ guilty plea and cooperation. Seven other charges were dropped.

BetonSports was founded by Gary Kaplan, who hired Carruthers as CEO in 2000. Kaplan, Carruthers and others were indicted in 2006.

Carruthers was arrested in July 2006. Kaplan was arrested in March 2007 and is being held at the St. Charles County Jail near St. Louis. The company ceased operation in 2006 and pleaded guilty to racketeering charges in May 2007.

He said during court proceedings last year that he initially was unaware online gambling was illegal.

Federal prosecutors said Carruthers conducted the business through a variety of illegal means involving racketeering, mail fraud, violations of the Wire Wager Act and money laundering. They said the company falsely advertised that its Web- and phone-based gambling operations were legal.

Prosecutors said the company also misled gamblers into believing that money transferred to BetOnSports was safe and available to withdraw at any time. In fact, the money was used to expand operations. When BetOnSports went out of business, customers lost more than $16 million.

The case was prosecuted out of St. Louis because some of the victims were from here, BetOnSports advertised near the Edward Jones Dome during St. Louis Rams games, and some assistant U.S. attorneys here have expertise in targeting those involved in Internet gambling.

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