David Carruthers
Encyclopedia
David Carruthers was the CEO and a board member of online gambling
Online gambling
Online gambling, also known as Internet gambling and iGambling, is a general term for gambling using the Internet.-Online poker:Online poker tables commonly offer Texas hold 'em, Omaha, Seven-card stud, razz, HORSE and other game types in both tournament and ring game structures...

 company BETonSPORTS plc
BetonSports
BetonSports plc is a British online gambling company founded by Gary Kaplan in 1995. The company was one of the biggest players in the United States online gaming market, drawing in several billion US dollars in wagers in the early 2000s...

. He served as CEO from July 2000 until July 24, 2006. He was arrested in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 on July 16, 2006 on charges related to his role as CEO of that company; he was subsequently convicted of racketeering conspiracy and sentenced to 33 months in prison.

Carruthers is an advocate of online gambling regulation.

Career

A native of Edinburgh in Scotland, Carruthers attended Art college before joining Ladbrokes Plc
Ladbrokes
Ladbrokes plc is a British based gambling company. It is based in Rayners Lane in Harrow, London owned by Bhavin Kakaiya. From 14 May 1999 to 23 February 2006, when it owned the Hilton hotel brand outside the United States, it was known as Hilton Group plc...

, the UK's largest retail bookmaker in 1976, where he became the youngest betting shop manager at the age of 19. During a twenty-four year career with Ladbrokes, Carruthers graduated with an MBA from the University of Wolverhampton
University of Wolverhampton
The University of Wolverhampton is a British university located on four campuses across the West Midlands and Shropshire. The city campus is located in Wolverhampton city centre with a second campus at Compton Park, Wolverhampton; a third in Walsall and a fourth in Telford...

 and rose to manage business development strategy for Ladbrokes shops in West England. He managed around forty of the business’s then 1,900 high street betting shops, managing the Midlands and south Wales territories.

Running career

While residing in St. Louis, David established himself as an elite masters distance runner. The extent at which he was able to participate in the local running community while constrained to his house arrest mandate is perplexing.
Masters PR's
Mile - 4:58 2009 Big River Running Macklind Mile
3,000m - 10:06
5,000m - 17:47
10,000m - 37:24 2009 Go! St. Louis Halloween 10k
Marathon - 3:07:29

http://www.bigriverrunning.com/mastersbios.php#carruthers
http://www.gostlouis.org/10K_men_results.html (21st overall)
http://www.bigriverrunning.com/mmilemaleoverall09.htm (38th overall)

Appointment as CEO, BETonSPORTS plc

In July 2000, while it was still a privately held company, Carruthers was appointed as CEO of BETonSPORTS, and tasked with bringing the company to a stock market listing.

This he achieved in July 2004 when BETonSPORTS plc successfully listed on the London AIM stock market, and raised £54.6 million (at the time US$101 million).

At the time of the initial listing 48.1% of the company’s issued share capital was placed with institutional investors. The offering was underwritten by Evolution Beeson Gregory. It was the third largest IPO fundraising on AIM during 2004.

Carruthers oversaw rapid growth for the company, which more than tripled its operating profits during his tenure. He was appointed to the board of directors on June 18, 2004. BETonSPORTS had a turnover, for the year ended January 31, 2004, of US$1.6 billion. The Group generated a 276% increase in turnover over the period 1999-2004 and profits before tax rose from US$0.6m to approximately US$26m during the same period.

In the fiscal year ending Feb. 5, 2006, the company reported a 65 percent gain in operating profit on continuing operations to $20.1 million. The company said it handled $1.77 billion worth of bets for the year, up 25 percent.

As at Feb. 5, 2005 Carruthers owned 1,185,567 ordinary shares in the company (1.46% of the company based on 81.15 million shares outstanding), and had options for 3 million shares exercisable at £1.40 per share between 15 July 2007 and 15 July 2014.

Online gambling regulation advocacy

Carruthers is a noted and vocal advocate of online gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...

 regulation. He has frequently engaged in public debate with opponents of online gaming (particularly in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

), and has argued vociferously for government oversight and taxation of the industry. He has lobbied for regulation on the basis that would help to protect against gambling abuse and underage gambling as well has provide much needed tax revenue to the US government, he sought support from the government in finding ways to protect consumers. Carruthers publicly called for transparency among his industry peers and suggested that a good starting point for operators was a public offering of shares.

Carruthers has accepted numerous speaking engagements in which he has lectured on the benefits of regulation. He has also written magazine articles, newspaper op-eds and a white paper on the topic. But the cornerstone of his lobbying efforts was a grass-roots campaign encouraging American consumers to voice their disapproval of prohibition efforts.

Representative of his arguments for regulation is a 2006 Baltimore Sun article by Carruthers:
"Here is the secret that these politicians don't want the public to know about our industry: We want to be regulated. We want to be taxed. We want to be licensed. Instead of dealing with us constructively to address issues of mutual concern, these legislators prefer to pretend that they can control the Internet.
"Instead of protecting the public, they would rather waste time on public posturing to their partisan base, and they would rather waste tax dollars on empty legislative exercises instead of taking ethical actions that would increase revenues to cities, states and the federal government from the taxes we would pay."


In 2004, when leading Internet portals Google and Yahoo! announced they would stop carrying adverts for online casinos, blaming a "lack of clarity" in US regulations, Carruthers told the New York Times:
"I urge these search engines and other service providers to stand up for themselves and challenge these pressure tactics by federal prosecutors."


Carruthers explained to the Wall Street Journal in an August 2, 2004 article: "What happened with alcohol [prohibition] was a disaster," he said. "Nobody wants this business, which is flourishing offshore, being pushed back onto the streets and the back alleys of the U.S." He also argues that "there's a huge missed opportunity here" for the US government to collect revenue.

On April 4, 2006 Carruthers debated Rep. James A. Leach (R-Iowa), on the merits of Rep. Leach's Unlawful Internet Gambling Enforcement Act (H.R. 4411, part of which became part of the Safe Port Act
SAFE Port Act
The Security and Accountability For Every Port Act of 2006 was an Act of Congress in the United States covering port security and to which an online gambling measure was added at the last moment...

). In response to Rep. Leach's rhetoric, Carruthers presented the case for the regulation of the online gambling industry in the United States.

Arrest during US transit flight

On Sunday July 16, 2006 Carruthers was arrested at Dallas-Fort Worth International Airport
Dallas-Fort Worth International Airport
Dallas/Fort Worth International Airport is located between the cities of Dallas and Fort Worth, Texas, and is the busiest airport in the U.S. state of Texas...

 in Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

 while changing planes. He was travelling with his wife, Carol, from the BETonSPORTS Annual General Meeting in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 to his home in Costa Rica
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....

 where the two lived since 2000.

(At that meeting held on Friday, July 14, he had publicly announced that the chances of the Unlawful Internet Gambling Enforcement Act of 2006
Unlawful Internet Gambling Enforcement Act of 2006
The Unlawful Internet Gambling Enforcement Act of 2006 is United States legislation regulating online gambling. It was added as Title VIII to the SAFE Port Act which otherwise regulated port security...

 (H.R. 4411) being passed by the US Senate were "remote".)

On July 21 Carruthers was still jailed in Fort Worth, Texas
Fort Worth, Texas
Fort Worth is the 16th-largest city in the United States of America and the fifth-largest city in the state of Texas. Located in North Central Texas, just southeast of the Texas Panhandle, the city is a cultural gateway into the American West and covers nearly in Tarrant, Parker, Denton, and...

 awaiting a bail hearing concerning Federal charges filed in Missouri
Missouri
Missouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...

 related to his company taking wagers over the telephone and Internet from US citizens.

While the indictment against the 12 defendants in the case includes 22 counts, Carruthers is only charged with count one, the Racketeer Influenced and Corrupt Organizations Act
Racketeer Influenced and Corrupt Organizations Act
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization...

 (RICO) charge. Other charges include 'Mail Fraud', 'Transmission of Wagers/Wagering Information', 'Interstate Transportation of Gambling Paraphernalia', and 'Interference with Administration of Internal Revenue Laws', specifically the evasion of Federal wagering excise taxes
Wagering excise taxes
The United States levies excise taxes on both legal and illegal gambling transactions.IRS Form 730, Tax on Wagering, is used to compute excise taxes for both legal and illegal wagers of certain types. For state authorized wagers placed with bookmakers and lottery operators there is a tax of 0.25%...

.

Coming straight after the controversial extradition of the NatWest Three
NatWest Three
The NatWest Three, also known as the Enron Three, are three British businessmen - Giles Darby, David Bermingham and Gary Mulgrew. In 2002 they were indicted in Houston, Texas on seven counts of wire fraud against their former employer Greenwich NatWest, at the time a division of National...

, to which it has been compared because both cases involve the indictment of non-US persons for actions taken outside the United States, the Carruthers case has attracted much media attention.

Analysts speculated that Carruthers' detention was politically motivated.:
"We will be monitoring this case closely as it is too early to say if this is part of a broader strategy on prevention of Internet gambling in the US or if it is the Department of Justice flexing their muscle and trying to influence legislation," said Greg Harris, an analyst at Cannacord Capital.
"David Carruthers is a prominent advocate of the pro-online gambling industry and the fear that this is an escalation of the anti-lobby will trouble markets," Williams de Broë analyst Nigel Parson said.

Initial detention hearing

At a detention hearing in Fort Worth, Texas
Fort Worth, Texas
Fort Worth is the 16th-largest city in the United States of America and the fifth-largest city in the state of Texas. Located in North Central Texas, just southeast of the Texas Panhandle, the city is a cultural gateway into the American West and covers nearly in Tarrant, Parker, Denton, and...

 on July 20, David Carruthers waived his right to a bail hearing when he appeared before the Texas court.

Instead, he asked to have the conditions of his release discussed in the jurisdiction of East Missouri
Missouri
Missouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...

, where the charges were filed. The magistrate agreed to the request.
"We are very optimistic that the court in St. Louis
St. Louis, Missouri
St. Louis is an independent city on the eastern border of Missouri, United States. With a population of 319,294, it was the 58th-largest U.S. city at the 2010 U.S. Census. The Greater St...

 can fashion some reasonable conditions for his release," said Carruthers' Texan lawyer, Tim Evans.
"We want to have the detention hearing in the jurisdiction of East Missouri," Evans told the court.
"We order that David Carruthers be detained pending a detention hearing to be held in the prosecuting district," was Judge Charles Bleil's reply.


Outside the courtroom, Evans explained why Carruthers had made the surprise move to shift the hearing to East Missouri. "Yesterday afternoon we determined it would be in our best interests to waive our right to a detention hearing here," he said. "We are very optimistic that the East Missouri court can fashion some optimistic and reasonable conditions for his release."

After his appearance in court, Carruthers returned to the medium-security federal prison in Fort Worth to spend the night. He was expected to make the journey to a jail in St Louis, Missouri by prison bus on Saturday July, 22nd.

Termination as CEO

Carruthers was terminated as BETonSPORTS Chief Executive Officer on July 24, 2006, following his arrest and detention. The company cited Carruthers' inability to perform his daily business duties while jailed as the primary reason for the termination of his contract. It is widely speculated that BETonSPORTS' board made this move in order to distance itself from the scandal and from questions regarding the criminal background of company founder Gary Kaplan
Gary Kaplan
Gary Kaplan was the founder of BetonSports.com , an online sports betting company which between 2002 and 2004 took in wagers amounting to nearly $4 billion, 98 percent of which came from the United States...

.

The original news item submitted to the London Stock Exchange Regulatory News Service stated that as a consequence Carruthers has also been removed as a director of BETonSPORTS plc.

Arraignment

On Monday July 31, 2006 the defendants in the criminal case were arraigned before U.S. Magistrate Judge for the First Eastern District of Missouri, Mary Ann L. Medler.

Entering not guilty pleas were Neil Kaplan and Lori Kaplan Multz, brother and sister of BETonSPORTS plc. founder Gary Kaplan, along with BETonSPORTS employee Tim Brown; owner of Mobile Promotions Inc. William Lenis; Lenis' daughter and son Monica and William Luis Lennis, and his nephew Manny Lenis, who worked for Mobile Promotions.

An attorney for one of the Florida firms indicted, DME Global Marketing & Fulfillment Inc., entered a not guilty plea, while two other companies did not enter pleas, including BETonSPORTS Plc itself.

Carruthers was supposed to appear in the St. Louis court at the same time as the other defendants, but was still in the process of being transported from Fort Worth, Texas
Fort Worth, Texas
Fort Worth is the 16th-largest city in the United States of America and the fifth-largest city in the state of Texas. Located in North Central Texas, just southeast of the Texas Panhandle, the city is a cultural gateway into the American West and covers nearly in Tarrant, Parker, Denton, and...

.

A not-guilty plea was entered for him, and it was ruled he would remain in custody until a $1 million (£539,000) bail bond arrangement could be finalized.

Later that day he appeared in front of the court, wearing leg irons, a white T-shirt and loose beige slacks, Carruthers only spoke to confirm his name, age and plea. Speaking outside the court, his lawyer, Tim Evans, said: "Right now, we want to get him out and living in clean sheets and clean clothes."

Release on bail

Carruthers was released on bail the morning of August 16, 2006. His conditions of release include a $1 million (£527,000) bail bond and that he must remain under house arrest in a hotel in Clayton, Missouri
Clayton, Missouri
Clayton is an inner-ring suburb of St. Louis and the county seat of St. Louis County, Missouri. The population was 15,939 at the 2010 census. The city was organized in 1877 and is named after Ralph Clayton, who donated the land for the courthouse.-Geography:...

, 24 hours a day (only being permitted to leave the hotel for court appearances, meetings with his attorneys or medical emergencies). He must also wear an electronic tagging device so that his movements may be constantly monitored, and it was required he get a dedicated phone line installed at the hotel.

During the hearing, Carruthers asked the judge only one question: "The house incarceration: is that 24 hours a day?". Judge Medler confirmed it was. Federal officials overseeing Carruthers' bond wouldn't confirm whether he will be forced to stay in his room, or have access to the entire hotel. Carruthers' St. Louis attorney, Scott Rosenblum stated that his client is not a flight risk.

"He's looking forward to responding to these charges in court," Rosenblum said.

Plea

On April 2, 2009, Carruthers pleaded guilty to racketeering charges, and agreed to cooperate in the federal investigation and prosecution of BetOnSports founder Gary Kaplan
Gary Kaplan
Gary Kaplan was the founder of BetonSports.com , an online sports betting company which between 2002 and 2004 took in wagers amounting to nearly $4 billion, 98 percent of which came from the United States...

. Prosecutors recommended a maximum sentence of 33 months. It is believed he could be let go with time served.

In September 2009, Carruthers withdrew his guilty plea.

On January 8, 2010, Carruthers, who had been living under house arrest in a hotel in Missouri for the last three years, agreed to a plea deal with prosecutors. Carruthers pleaded guilty to one count of racketerring conspiracy and was sentenced to 33 months in prison.

See also

  • Jay Cohen
    Jay Cohen
    Jay Cohen is the cofounder and CEO of World Sports Exchange , an online gambling company from 1996 until July 24, 2000, when he was the first United States citizen to be convicted in US Federal Court for violation of the Federal Wire Act for operating an online gambling company from a jurisdiction...

  • Peter Dicks
    Peter Dicks
    Peter F. Dicks is a London-based investment manager and venture capitalist. He was the co-founder of Abingworth plc, one of the earlier venture capital funds in Europe. He is also the former chairman of Sportingbet PLC, one of the world's largest sportsbooks.Early in his career, Dicks was a...

  • NatWest Three
    NatWest Three
    The NatWest Three, also known as the Enron Three, are three British businessmen - Giles Darby, David Bermingham and Gary Mulgrew. In 2002 they were indicted in Houston, Texas on seven counts of wire fraud against their former employer Greenwich NatWest, at the time a division of National...

  • Neteller
  • Nigel Payne
    Nigel Payne
    Nigel Payne is the former Group Chief Executive and current Executive Director of Sportingbet Plc, which operates a network of bookmaking websites, as well as the Paradise Poker online poker room....

  • Safe Port Act
    SAFE Port Act
    The Security and Accountability For Every Port Act of 2006 was an Act of Congress in the United States covering port security and to which an online gambling measure was added at the last moment...


External links

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