You May Be a Businessman in the U.K., but Here You're a Racketeer

On Sunday night the FBI arrested David Carruthers, CEO of the British online bookmaker BetOnSports, as his plane stopped in Dallas on the way to Costa Rica. Federal prosecutors are charging him with racketeering and wire fraud for accepting bets from Americans. The New York Times speculates that the Justice Department was emboldened by the House's recent approval of an online gambling ban, although current law arguably already bans online sports betting, if not online casinos. As with the arrest of Canadian marijuana seed dealer Marc Emery, the U.S. government is reaching across borders to impose its oppressive paternalism on citizens of more tolerant countries. How would the U.S. react if an executive of an American media company were arrested in Beijing for violating a Chinese law against subversive online speech, or in Tehran for creating indecent Web content viewed by Iranians?

Comments

[Kevin]

Good to know the FBI has rounded up the last dangerous criminal and now has time to protect our children from the guy who wants the Jets and the points.

[biologist]

Jacob, that's completely different. We're AMERICA. See now?

[Timothy]

How would the U.S. react if an executive of an American media company were arrested in Beijing for violating a Chinese law against subversive online speech, or in Tehran for creating indecent Web content viewed by Iranians?

In the former case, it will depend upon what the "subversive" content is. In the latter, they would be pleased, because American paternalists hate freedom and boobs too.

[bago]

Reading this confirms that it was a good idea to make this a multi-martini lunch.

[SR]

"How would the U.S. react if an executive of an American media company were arrested . . . in Tehran for creating indecent Web content viewed by Iranians?"

Actually, the administration would probably approve of that one and tell Congress that the US is clearly falling woefully behind protecting American children if even a member of the Axis of Evil has laws against such things.

[SR]

The server squirrels are totally playing favorites today.

[Tanya]

As a freelance writer with over two-thirds of my clients in the online gambling industry, I hate your government with every fibre of my being.

[mediageek]

What the Hell is wrong with these people?

Were they dropped on their heads as children?

Goddammit. Everytime I read something like this, it just makes me want to send Calvin Ayre a fan letter.

[Tanya]

Ayre's annual Bodog Conference is to be held in Vegas next week. I'm hearing that the Conference will go on as planned, but many people who planned to go have changed their minds. That they are taking media and marketing companies down is scary news for all of us on the peripheral of the industry. No word yet if Ayre himself plans to show, but given his high-profile egotistical ways, he'd be a fool to show up.

[happyjuggler0]

Well, the US must crack down on such companies in shady countries with no real rule of law that engage in money laundering for terrorists.

Oh, wait a minute, he is from the UK and so is his company.

Damn, I hate my government with every fiber of my being....

[Shelby]

Here in the US, everyone is invited to hate the government, regardless of how they spell "fiber".

[V fuzzy fer-a-ner M]

Shelby - as long as it's in ENGLISH!

[Rex Rhino]

I don't know if I would call the UK or Canada more tolerant (both Canada and the UK have some pretty paternalistic policices of their own)... but it would be nice if alternativly-paternalistic societies would stand up to some of the U.S. paternalism.

I mean, it seems to me that the UK and Canada can't be THAT weak when it comes to their citizens being arrested by the United States.

I am thinking that Canada and the UK want to get rid of Marc Emery and David Carruthers respectively. If Canada can go balistic, and get a guy caught red handed bringing guns illegally into the U.S., to get all charges removed in a U.S. court, it seems they should be able to keep their own courts from extraditing Mark Emery.

[mediageek]

"No word yet if Ayre himself plans to show, but given his high-profile egotistical ways, he'd be a fool to show up."

The article about him in Forbes a few months ago gave the distinct impression that he will not go to either the US or Canada for fear of being arrested.

But I wouldn't sweat it much, either, if I had a compound in Costa Rica stocked with booze, bikes, and hotties.

[Tanya]

Here in the US, everyone is invited to hate the government, regardless of how they spell "fiber".

I must apologise to my neighbours. When chatting normally online, I tend to revert to Canadian spellings, though no offence was meant.

The article about him in Forbes a few months ago gave the distinct impression that he will not go to either the US or Canada for fear of being arrested.

Ayre travels frequently in and out of the US, as does Carruthers (the Brit arrested.) Both have their gambling operations in Costa Rica, and both take over 80% of their bets from US customers. Bodog's current and ex-employees have been interviewed by the RCMP recently (around the time the Forbes' article appeared) probably in cooperation with the FBI.

If Ayre shows up in Vegas next week, his ego is officially bigger than his bank account. And the guy is obscenely rich.

[The Wine Commonsewer]

Oh now there's a bright effen strategy. Annoy the crap out of our number one ally by arresting a brit for something that isn't even illegal in his own country. WTF?

Tanya, no offence was taken.

[El Christador]

I'm not particularly a fan of the US govt's attempts to extradite Marc Emery to the US. But, just to be clear on the facts, Emery is facing charges for conspiring to commit a crime that would have taken place in the US, although he was not on American soil when engaging in the alleged conspiracy. If I understand correctly, the allegations are that he was selling seeds, in a specific case, with the knowledge that these specific seeds were going to end up in the US, and that he gave advice to the buyer on how to conceal the seeds so as to get them through the border crossing.

I know that Canadian law allows prosecution in Canada for conspiracy provided either the conspiring occurred in Canada or the unlawful act which was the object of the conspiracy would have occurred in Canada. This suggests to me that perhaps the American extraterritoriality in the Emery case isn't that exceptional and might be pretty standard.

The comment that the Canadian gov't wants to extradite Emery is absolutely correct. If they didn't want to, I'm pretty sure they could decline to. I mean, there's an extradition treaty that might oblige them to (I know little about it), but I bet they could get around it if they wanted to. In fact, in the next paragraph, a particular way to get around it is discussed.

The last I heard on the Emery case was that a local Vancouver businessman, with no connections to Emery but peeved at the US extraterritoriality, had filed private criminal charges against Emery in Canada on effectively the identical charges (since the conspiracy is alleged to have occurred in Canada, it's prosecutable under Canadian law; it was merely the case that public prosecutors were not interested in filing charges). Canadian law allows private citizens to bring criminal prosecutions. Apparently the federal Justice Minister has discretion to halt an extradition if he/she is satisfied that the accused is facing equivalent charges in Canada. Speaking speculatively, and as someone who's not even a little bit a lawyer, if the Emery case made it through Canadian courts and resulted in either a final conviction or acquittal, I believe the Canadian Constitution would prevent his extradition to the US to be tried for the same crimes since it says "Any person charged with an offence has the right if finally acquitted of the offence, not to be tried for it again and, if finally found guilty and punished for the offence, not to be tried or punished for it again".

[VM]

"I must apologise to my neighbours. When chatting normally online, I tend to revert to Canadian spellings, though no offence was meant."

with this crowd? no apologies necessary.

Despite one usage and 3 spelling differences highlighted 🙂 (grins)

Are you a west coast resident? The Wickaninnish Inn is a favorite place of ours!

http://www.wickinn.com/

(Tofino has the best damn sushi restaurant we've ever visited, too!)

cheers!
VM

[Adam]

I'd love to see Alberto Gonzales subjected to every bit of torture he approved - not because he approved them, but more because of this shit and his general willingness to shove his mores down my throat. Fuck that guy.

[John C. Randolph]

Doesn't there have to be fraud for there to be wire fraud? Is there any indication at all than any of his US customers have been defrauded?

If people want to piss their money away betting on sports, it's their own damn business.

-jcr

[mediageek]

"If Ayre shows up in Vegas next week, his ego is officially bigger than his bank account. And the guy is obscenely rich."

Billionaire.

[Shannon Love]

According the DOJ, the indictment has little to do with online gambling per se and more to do with fraud, tax evasion and identity theft. It looks like the whole "its all about internet gambling" meme is most likely a product of the defense team.

Even if the prosecution was about honestly run gambling it does raise the interesting question of jurisdiction. Each internet transaction requires two parties, one at the client end and one at the server. Why does everyone seem to assume that server side automatically has jurisdiction? What if someone does load sharing across multiple servers in multiple jurisdictions? Could one transaction be legal and then a second otherwise identical transaction be suddenly illegal?

This is far from a matter of settled law.

[crimethink]

El Christador,

Interesting strategy, but it would not work. One can be tried twice for the same act if it violates the laws of two different jurisdictions. Even within the US, if you are charged with committing an act that breaks both state and federal laws, and are tried and acquitted of the state charges, you can still be put on trial for the federal ones (a la the Rodney King cops).

[Ammonium]

First they told us the federal government can regulate everything in the country since any economic transaction can occur over state lines.

Now they are telling us that the federal government can regulate everything in the world since Americans can contact anybody in the world on the Internet.

[Rick Barton]

Again our federal government embarrasses us.

[Tanya]

JCR: Doesn't there have to be fraud for there to be wire fraud? Is there any indication at all than any of his US customers have been defrauded?

The allegations of fraud, so far as I can tell, stem from BOS' advertising which states (paraphrasing): "BOS is the world's largest legal and licensed sports book." That these ads appeared in US-facing publications such as Maxim and Sports Illustrated make the statement that BOS is "legal and licensed" fraud, apparently.

VM: Are you a west coast resident? The Wickaninnish Inn is a favorite place of ours!

Sorry, no. I live near Toronto, or, about an hour from Buffalo.

Shannon: It looks like the whole "its all about internet gambling" meme is most likely a product of the defense team.

The principle defendent is Gary Kaplan who has been a target for years. He started a gambling operation out of NY in the early 90s, then moved the operation to Florida to avoid prosecution. The company he now owns, BOS, is located in Costa Rica, but the marketing operations are in Florida (this is very common.)

Nobody knows yet if these arrests are aimed primarily at Kaplan himself, the company, or internet gambling in general. One press conference had the Fed stating that online gambling helps fund terrorist organisations. Another, Senator Kyl, said he hopes this arrest sheds light on the larger problem of internet gambling and gives the anti-gambling bill credibility when it hits the Senate next month.

Also, Antigua took the US to the WTO and won ... as of this past April, the US is in full breach of the WTO ruling ordering the US to either shut down paramutuel horsebetting or open their federal market to offshore operations. The US has so far not complied with the ruling.

At any rate, these arrests are shaking up the industry dramatically. Share prices have fallen by as much as 24% in the past two days. I had a new client for whom I was to start work next week, gearing them up for the NFL season (75% of sports bets are on football.) They emailed me this morning saying they were suspending their launch. I'm expecting more of the same in the coming week.

I hate your government. Bunch of authoritarian motherfuckers.

[A. True Amurrikin]

"I hate your government. Bunch of authoritarian motherfuckers."

Hey, you can't say that about America! We're the best! And, besides, we have more nukulur bombs than anybody. So that makes us right about EVERYTHING! And if you don't do what we say, we'll imprison and enslave you in order that you might see what a righteous and just and blessed people we are (unlike youse guys).

Frikkin commies

[zener]

This is very embarrassing

[Shannon Love]

Tanya,

Sorry but nothing I have seen so far indicates that the government is asserting that the problem is internet gambling per se. I think the markets are reacting to bad or incomplete media stories and not the real indictment. It hard to understand, for example, how an honest firm would be concerned about the Feds busting someone for identity theft. Even in the NYT story the only analyst to go on record says that charges are company specific.

I think the narrative that this is moralistic American imperialism is simply reflexive. Somebody, probably the defendants, spun the story that way to the press and they ran with it.

[Tanya]

Shannon, a link to the indictment below.

http://www.telegraph.co.uk/money/graphics/2006/07/18/ubeton17pdf.pdf

[Tanya]

Amurrikin: Hey, you can't say that about America!

No worries. I hate my government, too!

[MarkV]

I can't WAIT to vote against the party in power come this November. And I'm not even a foam-at-the-mouth leftist.

[The Wine Commonsewer]

Funny how things strike you, for some reason this really incites me to riot. But, they have all the tanks and really cool guns, so I'm going to just kind of sulk about it.

[rm2muv]

It makes me very sad and embarassed that people throughout the world think that this administration represents my values. But I'll keep votin' for the other guys 'cause that's the only way anything will change.

[keith]

In this week's Economist, the "Britain" section, there was an article about a general protest within Britain over a recent cross-extradition treaty between the US and the UK. The trigger case wasn't online gambling; it was a trio of NatWest investment bankers who had a below-cost transaction with Enron. The UK has apparently ratified the treaty, so UK citizens can be held or deported with much greater ease by the US, but the US hasn't ratified the treaty yet, so Blair's government looks like prize chumps, unable to defend UK citizen's interests without getting a stick of their own. I don't have my mailing label at work, so I can't get the full text just now. But I wonder if this current activity is an attempt to "get while the getting is good" before the UK decides to abrogate the treaty, or if it simply expires on the Sentate's docket.

http://www.economist.com/world/britain/displaystory.cfm?story_id=E1_STGJRDQ

[Dan T.]

I have a feeling that eventually our society will be very sorry that it legitimized gambling like it has.

[Isaac Bartram]

I have a feeling that eventually our society will be very sorry that it legitimized gambling like it has.

Replace gambling with...well, just about anything and you have the lament of self-righteous busybodies the world over.

[Stevo Darkly]

I blame jazz.

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