Massachusetts prosecution appears to be UIGEA-based
A Beverley, Massachusetts resident is the subject of what is understood to be the first formal prosecution under the Unlawful Internet Gambling Enforcement Act, the regulations for which are on hold until June 1st this year.
Thirty-six year old local resident Todd Lyons is the subject of a criminal prosecution involving 36 counts of racketeering, money laundering, operating an illegal gambling business, interstate travel in aid of racketeering, filing false tax returns and a variety of other related charges, according to the Department of Justice, which unsealed a multi-count indictment last week.
The Salem News reports that the documents detail an enterprise involving offshore gambling entities in which it is alleged $22 million was collected.
Federal prosecutors claim that Lyons was the primary agent for Internet gaming site Sports Offshore, which based its website and toll-free phone line in Antigua, but actually operated in the United States, making its sports betting services available to Americans, the newspaper reported.
"The conduct alleged in this case reveals a blatant effort to circumvent gaming and tax laws," U.S. Attorney Carmen Ortiz said in a press release. "The notion that the type of activity alleged here is legal because it is conducted over the Internet from offshore is pure fiction."
The charges against Lyons include some under the Unlawful Internet Gambling Enforcement Act of 2006, under which he faces 16 counts of accepting checks from Massachusetts gamblers to cover their Sports Offshore debts and passing them through the US banking system.
He is also accused of falsifying his 2004 and 2005 tax returns. According to the indictment, Lyons claimed he earned $49 437 in 2004 but collected at least $162 112. In 2005, he claimed $97 352 in income but took in $216 007.
Lyons sent cash periodically from Massachusetts to Antigua through FedEx, the indictment said.
Ortiz said that Sports Offshore was an illegal gambling business in Lynnfield MA. The business office was moved to St. Johns, Antigua, in 1997, but its agents and customers remained in the United States, the Justice Department official revealed.
Sports Offshore conducted business from Massachusetts to Florida, and Lyons collected millions for the gambling enterprise, it is alleged.
The Salem News reported that the government indictment claims that Lyons had customers in Massachusetts and earned commissions off their losses. He also acted as a collector in eastern Massachusetts, receiving payments from other agents who had their own set of customers and delivering payments when the agents' customers won.
The organisation used an Antiguan front called Benevolence Funding Ltd. to launder a portion of the funds received from the illegal gambling business and to avoid detection.
Lyons faces a maximum of 20 years in prison on the racketeering and money-laundering charges, plus up to 10 years more on related charges.
Each count also carries a three-year term of supervised release and fines up to $250,000.
The case was investigated by the Internal Revenue Service's Criminal Investigation Unit and the Massachusetts State Police with assistance from the Essex County district attorney's office.