BetOnSports Directors May Have Moved Assets Ahead of Closure...By Hartley Henderson

[Rogthedodger]

The other day I was contacted by someone who is familiar with the BetonSports (BoS) situation and wanted to set the record straight. The person agreed to speak to me only on the condition of anonymity, but assured me that he/she is quite famaliar with the particulars of the company. Having read my piece on Vantis and the pending distribution of funds, the source wanted it to be known that more money may be available. However, before getting into all the details it would be useful to examine the history of BoS leading up to the liquidation. The following is a chronology of events according to the source with some backup from public records.

BoS, at the time called NASA sportsbook, started up in the 1990s with offices in Antigua and Costa Rica and was one of the leading offshore books. The company, spearheaded by Gary Kaplan, among others, used an ingenious combination of bookmaking skills and marketing to delineate itself as a prime offshore option for North American bettors. While many didn't approve of the loud and often direct advertising the company employed, without question it was effective. In the late 1990s the company split into 2 groups, with one group eventually becoming BetUS and the other operating as BoS. In 2000 BoS was extremely successful and was processing billions each year in handle. Kaplan envisioned a possible public offering of the company at some point in the future and hired David Carruthers, hoping that his notoriety in Britain may convince buyers to come forward. The company was very successful and in 2004 the company did go public, trading on the London AIM. 48.1% of the shares were offered to the public and the majority of shares were held by company officials with Kaplan keeping approximately 13% of the shares. According to the source this public offering was the start of the downfall for the company.

The company gained almost $113 million from the public offering, but the new British directors decided to take the company in a new direction. Kaplan was kept on as a consultant, but the company attempted to diversify itself by looking at new markets, acquiring existing companies and most importantly playing little homage to its existing client base. To make matters worse, David Carruthers unwisely flaunted the company's success at the U.S. Department of Justice, advertising in U.S. papers that the government had no business interfering with citizens' actions in the privacy of their own homes. Carruthers, along with other sportsbook directors such as Mark Blandford of Sportingbet, essentially told the U.S. government that they were untouchable because they were not American citizens and were beyond the long arm of the DOJ.

In the meantime BoS purchased MVP Sportsbook, V Wager and Player's Only Sportsbook for $37 million and later acquired Easybets for $20 million in a failed attempt to capture the Asian market. Furthermore, Carruthers and the new directors began to hemorrhage money by lavish spending in an attempt to woo new interests. Included in this spending were stays in the most luxurious hotels with no expenses spared, numerous parties (including one sponsored at the Playboy mansion) and the sponsoring of a second rate NASCAR team with the logo of BoS Poker. The company also started to divest itself of American influence and began to hire from outside, particularly British personnel. In a 2005 press release the company announced the hiring of Scott Waller as Chief Technical Officer, William Griffiths as head of marketing and numerous others that replaced the successful team that was already in place. The "Britanizing" of the company was clearly an indication that the new management wanted to turn BoS into a company that resembled businesses like William Hill and Ladbrokes and less like the original NASA. The company further got into trouble with a disastrous 2005 football season which resulted in heavy losses and a reduction in their share price. By many accounts this disastrous season could be laid at the feet of the new management who really weren't familiar with their current clientele, or for that matter with American wagering. In typical British style, the company closed accounts of winners, reduced limits drastically and effectively drove away much of the business that got it where it was. While the company appeared to be flourishing thanks to the new volume from the newly acquired sportsbooks, it was mostly smoke and mirrors. The increased volume was strictly a result of the recent acquisitions---BoS itself was sinking fast. Kaplan agreed to help the company out by getting it refocused and growing with its existing North American customer base, but the British management was certain that the future success lay with the Asian market and making the company more British-like.

By mid 2006 BoS was in a huge loss position and desperately took on all customers to make the balance sheet look better. Consequently, charge backs went from under 1% to 13% which only further reduced the company's profits. Carruthers realized that the only possible way to survive was to get a loan from Barclays Bank. Barclays seemed prepared to loan the company enough to keep it afloat, but things changed drastically on July 16th, 2006. On that day David Carruthers was travelling with his wife to Costa Rica from Britain when his plane touched down for a layover at the Dallas-Fort Worth Airport. At that point the FBI arrested and charged Carruthers under the RICO act. The indictments against BoS which were issued in June 2006 and sealed were then unsealed after the arrest of Carruthers. 10 days later the company fired Carruthers as CEO, but they realized the Barclay's loan wasn't going to go through and for the most part BoS was a sinking ship. The DOJ later arrested Peter Dicks in the United States, and later that year issued an arrest warrant for Gary Kaplan. And finally, Kaplan was extradited from the Dominican Republic to the United States in 2007.

According to the source, this is where the chicanery began by the company directors. Realizing the company was going to be forced to shut down, the directors began to ship money, the bulk of its computers and other assets to the offices of Tamarindo Systems located in Ottawa, Ontario, Canada. According to the Corporations Canada website, Tamarindo systems was incorporated on December 5, 2005, but today is not operating. The source also indicated that Scott Waller had an interest in Tamarindo Systems. In 2007 Antigua's regulatory body appointed Vantisplc as the liquidators for BetonSports. Why Vantis was chosen is still unclear, but the source stated that no bankruptcy details were ever announced in Costa Rica. As was stated in my last article, Vantis has suggested that its records indicate that $16 million is owed to bettors, but the source disputes that figure, claiming that the amount is a bit inflated. In its statement Vantis wrote the following:

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

The source seems to feel that the database figure is likely a bit inflated since chargebacks weren't included. The figure owed is probably closer to $13 million. Asked why he/she felt it was important to come forward with this information, the source was blunt. "A lot of innocent people were hurt by the gross incompetence and fraudulence of these directors," the source answered, "not just bettors but employees of BetonSports as well." Indeed almost 1,100 employees that relied on the company for its livelihood were put out of work and many were stiffed by the company for work they provided. The source also wanted to make it clear that for the most part Gary Kaplan had nothing to do with the failure of the company. It was when Kaplan was forced out at the time of the public offering that things started to go downhill. It should also be noted that BoS never took control of Easybets and the bank accounts and databases were left in place. When the indictments came down, Easybets took back their business but never returned any of the $20 million paid to them.

BetonSports had all the pieces in place to be one of the premiere offshore sportsbooks, but suffered its inevitable fate due to arrogance, gross incompetence and greed. Today two directors are in jail, but others are roaming free with ill gotten cash, while bettors and employees are out their funds. Even if the bettors do get funds back it will be a small portion of what they are owed. Unfortunately, as usual it's the little guy who suffers the most in these situations.

07-05-2008
Hartley Henderson
MajorWager.com
henderson@majorwager.com

http://www.majorwager.com/frontline-676.html

[TheGuesser]

Great article, and I hope Vantis pursues the money stolen by the BOD, for their ultimate distribution. I like dreaming.
One minor nit. Players Only was never sold to BOS. They were always part of the Starnet/World Gaming chain. I think you might be thinking of Players S-B.

[RaisinCapital]

The company, spearheaded by Gary Kaplan, among others,

Poker player and announcer?

[SlipperyPete]

Mr Kotter is GABE Kaplan

[RaisinCapital]

Gabe!! Thats right. Thanks.

[SlipperyPete]

BTW there was no doubt in my mind that the BOS people (and for that matter, every other sportsbook) have a good chunk stashed away

[Mr Falcone]

BTW there was no doubt in my mind that the BOS people (and for that matter, every other sportsbook) have a good chunk stashed away

Aside from the Biggie ones, you would be surpirsed how many are operating week to week so to speak...........Would amaze you......

[pokerjoe]

Excellent article. TY.

[luke m.]

Originally Posted by TheGuesser

Great article, and I hope Vantis pursues the money stolen by the BOD, for their ultimate distribution. I like dreaming.
One minor nit. Players Only was never sold to BOS. They were always part of the Starnet/World Gaming chain. I think you might be thinking of Players S-B.

Starnet Gypsy, is this your gaming chain?

[TheGuesser]

Dear BetonSports Customer
Further to our report in May 2008 we write to provide a further UPDATE with regard to Liquidation matters.
Creditors will recall that we were appointed Liquidators of Betonsports (Antigua) Limited ("the Company") by an Order of the High Court in Antigua and Barbuda on 8 February 2008.
In the interim period we have been attempting to recover the assets of the Company and agree the claims of creditors, which comprise gaming players and trade creditors.
Assets
In May of this year a team from Vantis visited Antigua to analyse the Company's books and records to extract further information to support the debt collection exercise. Certain records have still not been located, which remains a matter of concern for us in our conduct in this matter.
Since our last report key Board directors of the Company have been interrogated at our offices in London, and they continue to assist us with our enquiries and investigations. We are currently investigating the possible existence of financial records in Costa Rica.
Where sufficient financial records are available we continue at this time to pursue Company funds located in various jurisdictions including the USA, South Africa and Germany.* These funds partly represent international payments in transit frozen by payment processors at the time of the declaration by the U.S government that internet gaming was unlawful. We are seeking to secure settlement of funds where appropriate without recourse to expensive litigation in those jurisdictions.
Creditors
Based on asset realisations to date by ourselves and the Gaming Regulator in Antigua, and known and estimated creditor balances (both gaming creditors and trade creditors) in the Liquidation estate, the dividend availability if a distribution were made at this time would be less than 5 cents on the dollar, or 5%.
We therefore consider it imprudent and economically unviable to circulate a dividend at this time, pending possible further assets being recovered as referred to above.
General
We continue diligently to pursue the assets of the company with a view to maximising the return to the gaming clients and other creditors. We continue to investigate the pre liquidation activities of the Company, and the board of directors, and we have a continuing dialogue with the Department of Justice in the USA with regard to all Liquidation matters.
As stated previously it is not in our interest for matters to become protracted. The High Court in Antigua has decreed that the Liquidators be remunerated on a recovery/performance basis. We continue to seek the best outcome for all parties.
A further update will be circulated in due course.
To register your claim if you have not already done so please complete the details via the weblink below, using your creditor reference XXXXX to confirm your claim against the company.
https://betonsports.vantisplc.com/
If you do not wish to claim in this matter and do not want to receive any further emails from us please go to https://betonsports.vantisplc.com/ca...creditor=XXXXX
*
Yours sincerely
Joint Liquidators
For and on behalf of BetonSports (Antigua) Limited -In Liquidation
Vantis
PO BOX 997,
St Albans,
AL1 9LQ,
United Kingdom
https://betonsports.vantisplc.com/
Your creditor reference:
XXXXX
Your account details
A/C No:* XXXXX
Name:* XXXXX
Email: XXXXXXXXXXXXXX
Address:
XXXXXX
XXXXXXXXXXX
United States of America
XXXXXXX- XXXXXXXX- XXXXXX
US
Trading Names/Brands of the BetonSports Group
MVP Bets
BETonSPORTS
Millennium Sports
Infinity Sports International
Gibraltar Sports
BetOnFantasy N/A
WagerMall
BlueGrassSports-N/A
Millennium Casino
Infinity Casino
Gibraltar Casino
MillPoker
InfinityPokerClub-N/A
GibraltarPoker-N/A
BetOnSports
V-Wager*
Players Super Book
MVP Sportsbook
Virtual Bookmaker*
Gecko Casino
Bogarts Casino
MVP Casino*
Jackpot Hour
Toucan Casino
Bet Jockey****
MVP Racebook**
Bet Horse Tracks*
Live Horse Betting**
Popular Poker***
MVP Poker****
Bogarts Poker****
Poker Elite****
Mardi Gras Poker*
Bettors Net***
Vant

[luke m.]

Just recieved this email

Dear BetonSports Customer

Further to our report in December 2008 we write to provide a further UPDATE with regard to Liquidation matters.

Creditors will recall that we were appointed Liquidators of Betonsports (Antigua) Limited ("the Company") by an Order of the High Court in Antigua and Barbuda on 8 February 2008.

In the interim period we have been attempting to recover the assets of the Company and agree the claims of creditors, which comprise gaming players and trade creditors.

Assets

In our last report we advised that a team from Vantis visited Antigua to scrutinise the Company's books and records to extract further information to support the debt collection exercise. Certain records have still not been located, which remains a matter of concern for us in our conduct in this matter, as it prevents us from pursuing debts due to the Company. We are also making enquiries in Costa Rica with regard to company records allegedly located there.

Where sufficient financial records are available we continue at this time to pursue Company funds located in various jurisdictions including the USA, South Africa and Germany. These funds partly represent international payments in transit frozen by payment processors at the time of the declaration by the U.S government that internet gaming was unlawful. Since our last report we have been able to reconstruct sufficient company records to instruct lawyers to commence recovery of a debt in excess of $2million.

Creditors

Despite attempting to contact over 89,000 potential creditors by either email, mail or public advertisement, we have only received claims from 9,121 player creditors totaling $8,078,073.

In addition we have received claims from trade creditors totaling $16,534,761 of which $5,808,012 have been agreed and the balance of which is still being scrutinised against the companies records.

Based on these figures and the asset realisations to date by ourselves and the Gaming Regulator in Antigua, the dividend availability if a distribution were made at this time would be circa 5 cents on the dollar, or 5%.

We therefore consider it imprudent and economically unviable to circulate a dividend at this time, pending possible further assets being recovered as referred to above.

General

We continue diligently to pursue the assets of the company with a view to maximising the return to the gaming clients and other creditors. We continue to investigate the pre liquidation activities of the Company, and the board of directors, and we have a continuing dialogue with the Department of Justice in the USA with regard to all Liquidation matters.

As stated previously it is not in our interest for matters to become protracted. The High Court in Antigua has decreed that the Liquidators be remunerated on a recovery/performance basis. We continue to seek the best outcome for all parties.

A further update will be circulated in due course.

To register your claim if you have not already done so please complete the details via the weblink below, using your creditor reference to confirm your claim against the company.
https://betonsports.vantisplc.com/

If you do not wish to claim in this matter and do not want to receive any further emails from us please go to https://betonsports.vantisplc.com/ca...creditor=xxxxx



Yours sincerely

Joint Liquidators
For and on behalf of BetonSports (Antigua) Limited -In Liquidation