By Michael E. Miller
By Ryan Yousefi
By Kyle Munzenrieder
By Sabrina Rodriguez
By Michael E. Miller
By Carlos Suarez De Jesus
By Luther Campbell
By Kyle Munzenrieder
In ads on SDB Global's Website, the company appeared to be run from outside the United States. But when another undercover agent looked at the Website in the spring of 1997 and asked for information, he received a packet postmarked New York City. On October 15 agents requested more information. Another envelope arrived from SDB, postmarked Miami. On November 19 the FBI set up a $600 account with SDB by wiring money to a bank "which appears to be in Switzerland," according to the criminal complaint.
Agents bet on NFL football games in November and December 1997. They won some bets and lost others. On December 3 an agent requested that $100 of the deposit be returned. Five days later the agent received a Federal Express envelope that contained a $100 check. The return address on the FedEx envelope was SDB Global in North Miami Beach. The company logo included an 800 number registered to David Budin in Aventura.
David Budin recently pleaded guilty to violation of federal anti-gambling statutes and agreed to pay a $750,000 fine. He will also face as much as five years in prison when he appears for sentencing August 21. Steven Budin and Becher face maximum sentences of five years and $250,000 in fines.
Sam Rabin, the attorney who represents Becher, says the charges should be dropped. "All Mr. Becher did was work in the [SDB] office in Costa Rica," Rabin says. "He wasn't involved in the actual betting operation." But prosecutors contend Becher told an FBI agent he was a part-owner of the company.
"I imagine someone will challenge the law in this case," says Rabin. "I hope it won't be me."
Despite the indictment, some experts say the law on Internet gambling is murky. The defendants in the March 4 case were charged with violation of a 1961 statute called the Interstate Wire Act, which was designed to combat traditional betting. (Another seven people associated with offshore betting sites were charged later in March under the same statute.) That law prohibits the use of "a wire communication facility" for the placing or soliciting of bets on sporting events or other contests. In making their case against the Budins, Schillinger, and the others, the feds applied that 37-year-old law to the Net. Their reasoning: It operates over phone lines. "The Internet is not an electronic sanctuary for illegal betting," declared U.S. Attorney General Janet Reno.
The Florida Attorney General's Office agrees. "It's illegal. Period!" says special counsel Gary Betz. Betz spearheaded the Florida investigation into Internet gambling last year. He says the state targeted the industry just before the NFL season began because prosecutors had discovered numerous advertisements for offshore betting. Those ads stated the betting was "completely legal," says Betz. "Well, it isn't."
It was at Betz's insistence that State Attorney General Bob Butterworth approached Western Union and persuaded the company to stop wiring money from Florida to offshore gambling sites. Butterworth also persuaded media, such as sports radio station WQAM-AM (560) in Hollywood, to stop accepting their advertising. Companies were told they were abetting a crime. "We continue to not accept that advertising," said WQAM sales manager Luanne Winick.
The law is not so clear as Betz makes it out to be, says Fletcher Baldwin, a law professor at the University of Florida and an expert in international financial crime. Baldwin says the 1961 wire law has been updated over the years to cover changes in technology, such as the cordless telephone. But charging someone with gambling over the Internet is a different matter. "It's a gray area," he says. "The law was written to deal with the telephone and your average bookie. Courts have not always been willing to expand on that." Baldwin believes any defendant willing to challenge the law could go free. "But it would take a long time and cost a lot of money," he says.
Congress may clamp down soon. The House of Representatives is considering a complex measure called the Internet Gambling Prohibition Act of 1998. Written by Sen. Jon Kyl of Arizona and supported by Florida's Senator Graham, the bill would outlaw Internet gambling except for state-authorized wagering and some Indian gaming. Justice Department attorneys recently attacked the bill as too broad and impossible to enforce.
"[If this passes] the people running those offshore sites won't be able to beat the rap," says Baldwin. "The courts will have what they need."
For Betz, the new federal law would come none too soon. A veteran organized crime investigator, he believes the Internet gambling industry is corrupt. He expects it to worsen.
Some businesses that register in foreign countries are actually located in the United States, Betz says. Some 800 numbers accept calls offshore, then bounce them back to a phone in this country, which a bookie answers. In some cases, he says, operators may simply abscond with bettors' money.
"The chances of getting ripped off are tremendous," says Betz. "Who on Earth would send $20,000 offshore to some bookie he's never seen? It's crazy."
Authorities have other worries. "[Lawmakers'] main concern is international money laundering," says Baldwin, the law professor. "[The industry presents] an easy way to launder money. You say you made so much in the Internet gambling business offshore when it really came from somewhere else. Or you say you lost so much doing business and you write it off." Organized crime groups in the United States, as well as Hong Kong's triads and Japan's yakuza, are salivating over the opportunity to take over, Baldwin believes.