BUSINESS

CG Tech pay $22.5m to resolve illegal gambling, money laundering charges

TAGs: Cantor Gaming, cg technology, Department of Justice, fincen, mike colbert, Nevada, sports betting

cg-technology-illegal-gambling-money-laundering-settlementNevada sports betting operator CG Technology (CGT) has reached a $22.5m settlement with federal agencies over its connections to illegal gambling and money laundering operations.

On Monday, the US Attorneys for the Eastern District of New York and the District of Nevada, along with the New York Police Department, the United States Postal Inspection Service (USPIS) and the Internal Revenue Service’s criminal division, announced a joint non-prosecution agreement with CGT over its involvement with an illegal messenger betting service.

The illegality stretches back several years, back when CGT was still known as Cantor Gaming, a sports betting offshoot of Wall Street financial services firm Cantor Fitzgerald. Cantor made a splashy arrival in Nevada’s sportsbook market but Robert Capers, US Attorney for the Eastern District, said “this growth came at the expense of compliance with the law.”

Daniel Bogden, the US Attorney for Nevada, added that Cantor had admitted violating federal laws by “accepting messenger betting, out-of-state betting and processing large amounts of monies which were the proceeds of illegal activities.” Capers said Cantor “became a place where at least two large-scale illegal bookmakers could launder their ill-gotten proceeds.”

Under the agreement, Cantor agreed to pay $16.5m for aiding and abetting illegal gambling operations from 2009 to 2019, including assisting an east coast group known as the Jersey Boys, which used Cantor to lay off bets made at its illegal sportsbook. The statement claims that the illegality was a direct result of Cantor’s strategy of catering to high-rolling bettors.

These high-volume bettors had direct access to Cantor’s chief linemaker Michael Colbert. Colbert reportedly encouraged Jersey Boys members to place bets on games in which Cantor had lopsided action. In August 2013, Colbert pled guilty to illegal gambling charges, for which he’s facing up to five years in stripes.

The DOJ fingered a man identified only as Florida Bettor #1 as a Jersey Boys member. This Florida bettor was also a tout who the DOJ said pled guilty to extortion and racketeering charges in Wisconsin on September 7, which essentially confirms Florida Bettor #1 as disgraced former Real Money Sports tout Adam Meyer.

CGT struck a deal to avoid prosecution that included “complete acceptance of responsibility for the full breadth of its unlawful conduct, cooperation, and far-reaching remedial measures.” This forgiveness is contingent on CGT complying with the terms of the agreement for the next two years.

USPIS inspector general Philip Bartlett said Cantor “ran its enterprise with total disregard for government regulations and the penalties associated with breaking the law.” IRS chief investigator Richard Weber piled on, saying that the illegal bookmaking probe “uncovered the kind of widespread corruption that is too often associated with criminal enterprises.”

FINCEN TAKES ITS POUND OF CGT FLESH
CGT was also fined $12m by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The civil money penalty was assessed due to CGT’s “egregious and systemic violations of the anti-money laundering (AML) provisions of the Bank Secrecy Act (BSA).”

However, $6m of FinCEN’s fine will be credited to partially satisfy CGT’s settlement with the Department of Justice. But the other $6m brings CGT’s total punishment to $22.5m.

FinCEN’s list of CGT’s shortcomings includes failure to file suspicious activity reports on transactions involving customers involved in “blatantly suspicious activity.” FinCEN cites CGT’s ‘highest-volume patron, who placed more than $300m in wagers between 2010 and 2013.”

The settlement is but the latest public black eye for CGT, which previously paid $5.5m in fines to Nevada regulators over its Mr. Magoo-like disregard for Colbert’s hijinx. More recently, CGT reached a $1.5m settlement with Nevada gaming regulators over CGT’s failure to correct known software glitches that both overpaid and underpaid (but mostly underpaid) its sportsbook customers on parlay wagers.

The software scandal cost CGT CEO Lee Amaitis his job. Like the company he fronted, Amaitis had a history of run-ins with the law, including a plea bargain on charges related to a “multimillion-dollar drug ring that was peddling cocaine at Wall Street firms.”

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