BY LINDA BENTLEY | AUGUST 11, 2010
Nine indicted in multi-million Internet gambling ring
‘Running an illegal gambling business is a crime. These defendants bet that they wouldn’t get caught. They lost.’
PHOENIX – On July 27, a federal grand jury returned a 21-count indictment against a bevy of bookies, some of which were operating right here in our backyard.
The indictment charged Daniel Meisel, 64, formerly of Paradise Valley; Brad Smothermon, 37, of Cave Creek (Tatum Ranch); James Baker, 41, of Peoria; Blaine Moore, 38, of Phoenix (Desert Hills); and Scottsdale residents: Christopher R. Finn, 37; Diane Beck, aka Diane Polus Beck, 52; Fred Guaragna, 58; Richard DiCapua, 68; and Oscar Barden, aka Paul Barden, 36, with conspiracy to engage in an illegal gambling business and the transmission of wagering information, engaging in an illegal gambling business, and transmission of wagering information.
Meisel, whose Paradise Valley home was sold at a trustee sale in March 2010, was also charged with transactional money laundering.
According to the indictment, Meisel was the leader of the conspiracy who directed the other members in carrying out the unlawful objects of the conspiracy, which included:
a. Establishing a sports book gambling operation in the United States and Costa Rica
b. Creating a network of agents and facilitators to oversee various groupings of gamblers
c. Arranging several password-protected, web-based sports books in Costa Rica for the defendants and gamblers to access on a regular basis
d. Utilizing various methods of moving cash and other funds between the parties to facilitate the gambling operation
e. Promoting and enhancing the gambling activities of the members and associates of the conspiracy
Meisel, accused of being the principal bookmaker, is said to have acted as the bank or house for the operation, was known as the master agent and had a number of agents working under him.
He principally used two Internet-based offshore sports books in Costa Rica to facilitate the bookmaking operation.
Multiple agents worked for Meisel within the sports gambling operation, each having multiple bettors under them whom they managed.
These agents handled communications with, conducted payouts of illegal gambling proceeds to, and collected illegal gambling debts from, their bettors.
Meisel communicated regularly with his agents and received illegal gambling debt collections from them at various times throughout the week.
Additionally, Meisel had his own group of bettors he personally managed and with whom he communicated, conducted payouts to and collected from, on a regular basis.
The indictment states Finn, Beck and Guaragna took direction from Meisel, as members of the conspiracy, managing many bettors and retaining a share of the gambling proceeds as determined by Meisel.
Finn, in addition to acting at the direction of Meisel, was also the leader of his own sports gambling sub-operation within the overall conspiracy, utilizing two other Internet-based sports books in Costa Rica to facilitate his component of the conspiracy.
Defendants Smothermon, Barden, DiCapua, Baker and Moore, reported to Finn, with each managing multiple bettors and retaining a share of the gambling proceeds as determined by Finn.
The indictment describes the type of gambling operation as a “credit based” of “credit shop” sports book, whereas, upon being introduced to the bookmaker or agent, and becoming registered as a new customer, the bettor was given a line of credit and rules for how the credit could be used to place wagers on sporting events.
Typical rules would include a maximum wager per sporting event, a maximum total for all outstanding wagers and an assigned credit threshold amount.
No money exchanged hands between the bettor and bookmaker until the bettor won or lost enough money to reach the bettor’s credit threshold amount. Payment would then be made by the bettor or by one of the agents in the gambling operation.
The offshore sports books used by the defendants were not used to exchange money, but rather to track bettors’ activities and account balances, either on the Internet or by calling a toll-free telephone number and providing an account number and password.
All of the toll-free numbers were routed to companies located in Costa Rica, which acted as “virtual wire rooms for the bookmaking operation by taking wagers and keeping electronic records of betting activity and results on computer servers located in Costa Rica.
And, while the Costa Rican companies did not have an interest in the outcome of the wagers, it instead charged Meisel and Finn, as bookmakers, a fee for managing each bettor account.
Gambling debts were mostly paid out or collected in person and in cash. However, on some occasions, business or personal checks were accepted from bettors. Wire transfers and deposits to specified accounts were sometimes used to pay gambling debts, while jewelry, watches and coins were also occasionally accepted in lieu of cash, or as collateral until the gambling debt was settled.
Meisel was said to have utilized banks to facilitate his gambling operation and would often provide bettors with bank account information at Bank of America and Wells Fargo, either under his name Beck’s name or Mid-back, Inc., an inactive Florida corporation that listed Meisel as an officer/director.
Meisel also provided a credit card account number to some bettors so that his credit card bills would be paid with illegal gambling proceeds. On other occasions, Meisel, a frequent visitor to Las Vegas, had bettors and/or agents pay his Las Vegas casino credit markers in lieu of collecting cash from them.
Finn made extensive use of FedEx, DHL and other overnight delivery services to facilitate his gambling operation by sending and receiving packages directly related to the collection and payout of gambling proceeds.
According to the indictment, the Internet gambling ring raked in millions of dollars since 2007.
Dennis K. Burke, U.S. Attorney for the District of Arizona, stated, “Running an illegal gambling business is a crime. These defendants bet that they wouldn’t get caught. They lost.”
Convictions for conspiracy and engaging in an illegal gambling business each carries a maximum sentence of five years. A conviction for transmission of wagering information carries a maximum penalty of two years for each count. A conviction for transactional money laundering carries a maximum penalty of 10 years for each count. Each count also carries a maximum fine of $250,000.
The investigation was conducted by special agents of the Criminal Investigation Division at the IRS, the FBI and Scottsdale Police Department.