The ongoing saga of BetonSports (BOS) appears to be coming to a close. In June 2006, months before the UIGEA was passed, the U.S. government issued an indictment against BetonSports for illegal bookmaking and named 11 people from the company it was seeking. A month after the indictment was announced, David Carruthers was arrested at Dallas airport en route to Costa Rica. He was charged under the RICO act. In 2007, BOS founder Gary Kaplan was caught and charged in the Dominican Republic and later in 2007 another BOS kingpin, Norman Steinberg, was also charged. Not long after Carruthers arrest BOS ceased trading on the London Stock Exchange and shortly thereafter the company was forced to shut down operations.  BOS's assets were frozen and account holders were left to wonder what would become of their funds. Thus began one of the most frustrating sagas for account holders of BOS. A very successful bookmaker, BetonSports were masters at marketing and enticing new account signups but in order to achieve this success they made many questionable decisions that would soon come to light and would affect the payback to BOS customers.

Calls to the DoJ in Missouri and the government in Antigua in the months following the demise of BOS went virtually unanswered and customers of BOS were left to believe that the millions of dollars that were in accounts were lost. The whole issue remained dormant for about 14 when Vantis Plc, a London based accounting firm, announced they were appointed as liquidators of BOS by the Antiguan government. Vantis was to be paid a fee of 5% for all assets recovered and a set amount for each client that submitted a claim. They likely felt it would be a routine bankruptcy procedure but when they took on the case they found that nothing was further from the truth.  In a press release Vantis noted that they were in a precarious situation as a result of being appointed as liquidators at such a late date. The press release stated the following:

"The whole Betonsports group, effectively ceased trading in July 2006 (14 months prior to our instruction) as a result of a Restraining Order issued against the group in the US, which was later converted to a full injunction. Naturally this had a devastating effect on the company's financial position. Over the following months contractual severance and termination costs in respect of the company's call centres, many hundreds of staff, supplier contracts, and finance contracts only served to further increase the liabilities of the company. On 22 November 2006 the FSRC obtained an order of the High Court in Antigua effectively freezing the company's assets and preventing ongoing trading or distribution of assets."

Thus, Vantis was essentially stating that BOS was insolvent and the financial situation for bettors was made worse because there were so many preferred creditors ahead of BOS clients. Vantis, nevertheless, was determined to initiate as many claims as possible, since the bulk of their fees was from client claims and posted an advertisement in major U.S. newspapers calling for BOS customers to come forward. It appears they were somewhat successful but the amount of claims was far less than Vantis expected based on comments in a later press release:

“Although the liabilities figure includes betters/players/customers "alances of $6.8million, we now know that these players are owed over $15.8million (as per the company's database)."

Vantis announced they had sent out over 89,000 emails to BOS "clients" on the database, but received few responses. The final tally showed that 9,300 customers submitted claims for approximately $8.1 million and other trade creditors have submitted claims for about $14 million. The figure owed to BOS customers per the financial statements seemed to be inflated since charge backs were never included in the figure. There is indication that charge backs were as high as 13% in 2005 and 2006, so the amount owed was probably around $13 million.  Doing
the math it's evident that only 10% of those on the database submitted claims, but those 10% requested over 60% of the amount outstanding. So, clearly those with large balances in BOS accounts sent in claims, while smaller accounts couldn't be bothered. It's also quite likely that a large number of those 89,000 accounts were dummy accounts added to make the client list appear larger than it really was.

No doubt Vantis executives were left scratching their heads as to why so few customers asked for compensation, but Vantis has never dealt with the U.S. government. And in their war against online gambling, U.S. customers know that the government plays hardball. The same situation occurred in early 2007 when American NETeller clients had their funds seized by the U.S. government and a company was later hired by the government to conduct the payback to American bettors. Larger U.S. players knew that the government was taking notes on who submitted claims and for how much, so many bettors with balances (even larger amounts) in NETeller felt it was better to forego the money owed to them rather than risking being put on an FBI or IRS watch list. In fact , even today, many Americans are left wondering if at some point they will be contacted regarding their past gambling activities. The BOS situation was even worse because the amount clients would get back was certain to be only pennies on the dollar.

As for the money owed to BOS, Vantis was successful in recouping some of the receivables owing to them but seemed to have little success with other assets.  The total amount recovered seems to be in the neighborhood of $2.2 million.  A source close to the situation also told me that many directors moved assets such as computers to Canada (likely to Tamarindo Enterprises which has since ceased operating) ahead of closing but a spokesperson for Vantis said they had no proof of that. I wrote a full article relating to the possible move of the assets to Tamarindo Enterprises for another website but it appears the directors of BOS never bothered to pursue it.

Fast forward 3 years from the initial call by Vantis for players to submit claims and there have been some developments. The first development was a result of the plea deal by Gary Kaplan. Kaplan tried to offer a defense that he was innocent of bookmaking because sports betting was a skill game exempt under U.S. law, but when it was clear that defense wouldnt work he made a deal with the government. He agreed to pay a fine of $44 million along with jail time. Vantis asked for that $44 million to be added to the assets for redistribution but the American government told them that the fine was not BetonSports money and was proceeds from illegal activities. Vantis apparently tried with no success for the DoJ to change its mind and Stephen Holtshouser, a prosecutor for Missouri at the time said the $44 million belonged to the U.S. people, who would spend more than that prosecuting the case. This year David Carruthers also pleaded guilty and was given a 33 month jail sentence but there were no fines involved with his sentence. As for Norman Steinberg, he was given a $10,000 fine and set free. Needless to say that pittance would have no impact on the amounts owed and also leads to speculation that Steinberg must have cooperated with the U.S. government in other ways to end up with such a small fine and no jail time.

As for Vantis, the company was forced to restructure earlier this year for various reasons including internal issues (including tax evasion allegations against some of its management),  as well as a disastrous outcome as liquidators of the Stanford Bank in Antigua. The company was performing advisory work on the Allen Stanford fraud scandal but the Swiss and U.S. governments froze assets of the bank making it impossible for them to collect their fees. Consequently, the company was put in the red and auditors for the publicly traded Vantis had to issue a warning.

Material uncertainties associated with receipts from the Stanford insolvency ... may cast significant doubt on the company's ability to continue as a going concern."

In June 2010 Vantis was relieved of its duty as liquidators of Stanford Bank by the high court of Antigua and the company was forced to change direction.

The company broke into different divisions and buyout firm FRP Advisory took over the trustees in bankruptcy business including the BOS liquidation. There was a concern by many former BOS customers who submitted claims that all was lost, but letters from FRP seemed to indicate differently. FRP has also tried to get reinstated as Stanford Bank liquidators, but so far, has had no success.

I recently successfully contacted an FRP Advisory spokesperson who was willing to talk more about the whole liquidation and she stated they are still in charge of the bankruptcy. At the same time they are taking directions from the Antiguan high courts in the whole matter and really have no more involvement other than cueing things up. The spokesperson stated that these were the directions given to FRP by the Antiguan High court over the next few months.

1)  FRP will advertise in national Antiguan and U.S. newspapers indicating that the final deadline for submission of claims is March 31, 2011.

2)  FRP will complete a final distribution of funds to gaming and
trade creditors by no later than 30 June 2011 and while it isn't certain what the final number of claims will be or exactly how much players will be reimbursed it is expected to be about 4 to 5 cents on the dollar.

3)  Once the funds are distributed FRP will ask for their fees and will ask to be relieved of any further doings as liquidators of FRP.

I asked the spokesperson why they are bothering to advertise again if there was no real hope of collecting more money or initiating new clients to come forward since that money could be used as part of the payout. And while she may agree with my comments she also made it evident that FRP was in no position to question authority at this time.

"Your comments regarding the advert are noted, but as we have mentioned, that is an order issued by the High Court in Antigua, so we will proceed with it."

The spokesperson also said they had no evidence that assets were moved in the pre-liquidation period and that we should produce proof it if at all possible. I pointed her to the piece written 2 years ago but at this time any of those assets would likely have been sold, so it's a moot point. The time to investigate the possible movement of assets was the period prior to Vantis being appointed, and the 14 month delay made that virtually impossible. So, Vantis/FRP can't be blamed in that regard.

No doubt FRP has regrets at this time dealing with the country of Antigua at all. The BOS liquidation produced less than optimal results and the Stanford liquidation scandal helped in practically bankrupting them. And now, they have been relegated to working at the bequest of the Antiguan High Courts on Antigua's timetable. And to make matters worse, they have been removed as liquidators of the Stanford Bank so any potential future revenue from that liquidation is lost.

So, in summary players have until March 31 to submit a claim for reimbursement of funds from BetonSports, if they have not already done so. Money will be distributed starting in June and the amount will be around 4 to 5 cents on the dollar. OSGA will provide details of where to submit additional claims once it's announced. If players are reluctant to submit a claim for fear of ending up on a U.S. list, they likely have no concern, since the whole liquidation is being handled by Antiguan courts.

The question many are likely wondering is whether things could have turned out differently for BOS customers. There are many individuals that can be blamed for the whole BOS mess but invariably the culpability wrests with the U.S. government (and particularly Catherine Hanaway and the Missouri DoJ) as well as with the former owners of BOS and particularly David Carruthers. Unfortunately for bettors and employees of BOS (up to 2,000 employees lost their jobs overnight) the DoJ's war against online betting and its mission to exact its pound of flesh from Carruthers and Kaplan meant that the U.S. players were never going to be considered when the DoJ made their arrests. It's clear the U.S. government feels no remorse for online bettors and in fact seems to consider U.S. citizens that gamble online as pariahs. This is true despite the fact there is still no law on the books (except in the state of Washington) that makes it a crime for Americans to wager online and land based casinos, racetracks, lotteries and poker rooms are rampant throughout the United States.

As for BOS, their belief that they were out of U.S. reach led to devastating results. Carruthers was very confrontational and had no problem telling the U.S. government they were wrong. In fact, not long before his arrest he told CBS news correspondent Anthony Mason that the U.S. government's fight against online gambling was dangerous. Moreover, BOS was very 'in your face' with their promotional campaigns, including a 2002 campaign where they handed out tee shirts and beer at a Tampa Bay Buccaneers game and enticed people to open BOS accounts. That decision alone raised the eyebrows of both the U.S. and British governments. In a time when most offshore gambling establishments were cutting back, the rhetoric BOS was trying to move their agenda forward and that only helped raise the ears of the DoJ and propel arguments by anti-gambling factions in the government like Kyl, Goodlatte and Bachus.

As well, the company had only itself to blame for its dire financial situation when it shut down. In a rush to expand, the company made numerous decisions that were less than proficient. Carruthers was known to hold extravagant parties to entice shareholders and the company paid an exorbitant fee to Tom Arnold to be a spokesperson for the company. But worst of all they bought companies left, right and centre. They paid $16.8 million to purchase MVP, Player's Sportsbook and V Wager and then paid another $20 million to purchase Easybets. To make matters worse the deal for Easybets never closed although the payment was made up front, so the owners of the website walked away with the $20 million and their domain. The string of bad purchases combined with a disastrous NFL season put BOS heavily into the red and the company's only chance was a loan from Barclay's Bank. BOS convinced Barclay's to loan them the money but the bank withdrew the offer after Carruther's arrest.

So, to answer the question of whether things could have been different, the answer is  a resounding yes. If the U.S. government had been more concerned about its citizens than local gambling interests and religious lobbyists, if BOS was more concerned with financial prudence, sensible marketing practices that didn't catch the attention of the U.S. government and protecting customer accounts than it was with reckless expansion and if the Antiguan government had involved liquidators earlier than it had and given them more autonomy, then the whole mess could have been avoided. Unfortunately none of that occurred and the final result was inevitable. Consequently, the bettors lose once again and the only ones who walk away happy from the whole situation are the lawyers and anti-gambling faction in the U.S. government who foolishly believe they are winning the war against online gambling.