BetUS and payment processing bust

**The Buzz** · 14 May 2007, 8:01 am

Lots of news over the weekend about a bust in Utah involving BetUS and some of the companies and individuals that helped process credit card payments ... BetOnSports was also allegedly involved.

http://www.lasvegassun.com/sunbin/st...051110426.html

... more from The Register

http://www.theregister.co.uk/2007/05...etus_indicted/

**vinism** · 14 May 2007, 4:20 pm

Buzzy sniffed out a big story today!! Here's a link to the PDF of the indictment. A story from one of our reporters will follow shortly.

https://www.gpwa.org/news/US_v_Lombardo.pdf

**GPWA Ryan** · 14 May 2007, 5:27 pm

Here is the story we hammered out today...There should be more information available when the indicted folks face arraignment on May 30.

Payment processors, BETUS indicted on money laundering charges

By Ryan McLane
May 14, 2007

Three payment-processors have been accused of miscoding gaming transactions and funneling that money to online casinos and sportsbooks in grand jury indictments unsealed last week in Utah.

The companies, along with BETUS.com, have been charged with money laundering, bank fraud, racketeering conspiracy and violation of the wire act.

The indictment also alleges that at least on U.S. bank official had been bribed to ensure that the transactions were mislabeled.

The 34-count indictment alleges BETUS used Hill Financial Services and Gateway Technologies in Utah and CurrenC and CurrenC Worldwide in the British Virgin Islands, to deceive credit card companies into believing more than $150 million in U.S.-based transactions were not tied to online gambling. The Unlawful Internet Gambling Enforcement Act, adopted in October, made it illegal for U.S. financial institutions to process online gaming transactions.

The U.S. Attorney is attempting to recover the $150 million under RICO, the federal Racketeer Influenced and Corrupt Organizations law.

"Payment processors who attempt to hide the true nature of the transactions they are conducting and the Internet gambling websites that use these payment processors will be prosecuted and brought to justice," said U.S. Attorney Brett L. Tolman in a statement.

The IRS led the investigation into payment processors.

"Internet gambling, along with other types of 'illegal e-commerce,' are areas of interest to IRS Criminal Investigation," Special Agent-in-Charge Wes Eddy said. . "Laundering money from illegal activity such as illegal internet gambling is a crime. Regardless of how the money changes hands-via cash, check, wire transfers or credit cards-and regardless of where the money is stored-in a United States financial institution or an off shore bank-we will trace the funds and seize them. IRS Criminal Investigation will vigorously investigate and prosecute the owners and operators of these illegal enterprises to the fullest extent possible."

Seven people were charged in the indictment in addition to the four companies. Baron Lombardo, 46, Richard Carson-Selman, 51, Henry G. Bankey, 49, Francisco Lombardo, 52, Count C. Lombardo, 43, Tina I. Hill, 32, and Kimberlie Lombardo 43 are all Las Vegas residents. Baron, Francisco, and Count Lombardo are brothers and Kimberlie and Francisco Lombardo are married.

None of the defendants are in custody because they are not considered flight risks, according to the U.S. Attorney's office. Richard Carson-Selman is the only person to be arrested. He was taken into custody May 10 in Las Vegas, but was released after an initial appearance in Las Vegas under the supervision of pre-trial services.

All of the defendants are scheduled to be arraigned in U.S. District Court in Salt Lake City on Wednesday, May 30, at 10 a.m. before U.S. Magistrate Judge Paul Warner.

Maximum penalties include 20-years for racketeering conspiracy, 30 years for bank fraud, two-years for transmission of wagers/wagering information, and 20-years for money laundering.

The Enterprise

The defendants allegedly set up a complex network of companies to funnel money from U.S. bettors to online sportsbooks and casinos.

The network consisted of three different companies – each with its own function.

The transactions started at the Gateway, a site owned and operated by Gateway Technologies. The Web site was used to process and track illegal gambling transactions. The indictment alleges that the defendants caused the Gateway to misclassify the transactions to Visa and MasterCard, representing that the transactions were for something other than gambling.

CurrenC, based in the British Virgin Islands, was the primary company used to conduct fraudulent credit card and wire transfers. They used a series of offshore accounts to transfer money between the Gateway and online casinos, and facilitated payments from the online casinos back to the defendants.

The indictment names BETUS.com, BetOnSports.com and four other unnamed online casinos as gaming companies that received money in this way. BETUS.com was the online gaming company charged in the indictment.
Hill Financial Services provided accounting and technical services for the operation.

The defendants received a fee for each transaction they processed as payment, the indictment alleges. They also received a percentage of each transaction that was conducted via Western Union, according to the indictment. Depositors who wanted to use Western Union wired money via accounts in the Philippines. The money was then funneled to the online casinos.

No further information about the investigation or evidence is available at this time according to the U.S. Attorney's spokesperson Melodie Rydalch.

**Carlo** · 15 May 2007, 1:03 pm

Hey guys, the Prof at CAP got this spot on, check this out: http://www.casinoaffiliateprograms.c...67&postcount=2

While BetUS was named as one of the clients working with that processor they were NOT indicted. The charges are leveled at the payment processor not their clients or customers who used the service.

**ogpaper** · 15 May 2007, 1:25 pm

I personally would like to hear more from BetUs directly, as the press release from DoJ clearly states that BetUs is being indicted... Not to mention that it seems long time advertisers are steering away - for example, gambling911 stopped using your odds the same day in their articles.

This is a very dangerous situtaion as if all this is actually going on, and it's not just DoJ blowing smoke, BetUs could trun into BetOnSports x 10.

And if the goverment want to recover the money, there is a chance that those customers would have to pay the banks back the money they have deposited at BetUs.

I understand that BetUs is sponsoring some CAP stuff, but, again, this is very serious situation and I am surprised that BetUS have not publicly and openly addressed the situation, either via a press release, or through a post on this and other forums.

If DoJ are actually after BetUs as they state, and BetUs turns into another BetOnSports - I think 80% of the USA betting market will be lost overnight.

**vinism** · 15 May 2007, 1:29 pm

BetUS was listed as a defendant in the indictment we received from the U.S. Attorney's Office in Utah. Here's a link to the indictment we received from the DOJ/U.S. Attorney's Office: https://www.gpwa.org/news/US_v_Lombardo.pdf

We also just called their press contact, Melodie Rydalch, and let them know that BetUS was saying they had been simply named, not indicted. Rydalch told us that BetUS had indeed been indicted. In addition, the indictment of BetUS was mentioned prominently in the press release by the U.S. Attorney's Office. We will be posting that release shortly. The exact quote from the release is:

One Internet gambling website, BetUS, is also charged with conspiring with the individuals named in the Indictment.

**vinism** · 15 May 2007, 1:45 pm

Here's the press release on the BetUS indictment:

U.S. Department of Justice

Brett L. Tolman

United States Attorney
District of Utah

__________________________________________________ ______________________

FOR IMMEDIATE RELEASE CONTACT: MELODIE RYDALCH

May 11, 2007 801-325-3206
801-243-6475 (cell)

S.A. TED ELDER
IRS
801-799-6743
801-891-9348 (cell)

PRESS RELEASE

GRAND JURY RETURNS INDICTMENT

CHARGING DEFENDANTS WITH

OPERATING ILLEGAL CREDIT CARD TRANSACTION, PROCESSING BUSINESS

INDICTMENT ALLEGES DEFENDANTS PROVIDED SERVICES TO DISGUISE CREDIT CARD CHARGES

FOR INTERNET GAMBLING

SALT LAKE CITY – A federal grand jury in Salt Lake City returned a 34-count indictment Wednesday afternoon charging seven individuals and four companies with conspiring to violate laws prohibiting Internet gambling.

The indictment, unsealed Friday morning, alleges the defendants operated a business that helped Internet gambling websites disguise credit card charges for gambling as charges for something else thereby deceiving credit card issuers who otherwise would not have authorized the transactions. The indictment alleges the defendants’ businesses also assisted Internet gambling websites by arranging fund transfers between bettors in the United States and various Internet gambling websites using Western Union wire transfers. One Internet gambling website, BetUS, is also charged with conspiring with the individuals named in the Indictment. According to BetUS’s website, BetUS provides internet based sports and casino gambling.

During the course of their conspiracy, the indictment alleges that the defendants facilitated the payment of more than $150 million to illegal Internet gambling websites.

Announcing the indictment are Brett L. Tolman, United States Attorney for the District of Utah, and Wes Eddy, Special Agent in Charge of the IRS Criminal Investigation Division Las Vegas Field Office.

Charged in the indictment are Baron Lombardo, age 46, of Las Vegas; Richard Carson-Selman, age 51, of Las Vegas; Henry G. Bankey, age 49, of Las Vegas; Francisco Lombardo aka Frank Lombardo, age 52, of Las Vegas; Count C. Lombardo, age 43, of Las Vegas; Tina I. Hill, age 32, of Sandy, Utah and Las Vegas; Kimberlie Lombardo aka Kittie Lombardo, age 43, of Las Vegas; CurrenC, Ltd., also known as CurrenC WorldWide, LTD., of Road Town, Tortola, British Virgin Islands; Gateway Technologies, LLC., of Draper, Utah; Hill Financial Services, Inc., of Draper, Utah, and Las Vegas, and BetUS of San Jose, Costa Rica and Kanawahke, Canada.

“Virtually all Internet gambling is illegal. Individuals and businesses that facilitate illegal Internet gambling are violating numerous federal and state laws. Payment processors who attempt to hide the true nature of the transactions they are conducting and the Internet gambling websites that use these payment processors will be prosecuted and brought to justice,” U.S. Attorney Brett L. Tolman said.

IRS Special Agent In Charge, J. Wesley Eddy stated, "Internet gambling, along with other types of 'illegal e-commerce,' are areas of interest to IRS Criminal Investigation. Laundering money from illegal activity such as illegal internet gambling is a crime. Regardless of how the money changes hands - via cash, check, wire transfers or credit cards, and regardless of where the money is stored (in a United States financial institution or an off shore bank), we will trace the funds and seize them. IRS Criminal Investigation will vigorously investigate and prosecute the owners and operators of these illegal enterprises to the fullest extent possible."

The defendants are charged with RICO conspiracy, bank fraud, violations of the wire-wager act, and money laundering. In addition to the criminal charges, the indictment also contains a forfeiture provision seeking forfeiture of $150 million as well as real estate, vehicles, and funds in numerous bank accounts.

The indictment alleges the individual defendants and three related businesses, CurrenC, LTD, also known as CurrenC Worldwide LTD; Gateway Technologies, LLC; Hill Financial Services, as well as BetUS, conspired to promote illegal Internet gambling in the United States. The indictment alleges the defendants operated a payment processing business that catered to illegal Internet gambling businesses. As a part of their payment processing services, the indictment alleges that the defendants: purposefully misclassified credit card transactions to fool banks into processing Internet gambling charges; collecting monies transferred from bettors in the United States via credit card transactions; and, transferring the collected funds to various Internet gambling web site operators. The indictment further alleges that the purpose of the defendants’ business was to help gambling websites have their transactions approved by Visa and MasterCard issuing banks, which would not knowingly authorize Internet gambling transactions.

The indictment alleges that the defendants also conspired to offer their illegal Internet gambling websites another payment processing option: Western Union wire transfers. According to the indictment, the defendants caused the illegal Internet gambling website’s customers to wire funds through Western Union to people in the Philippines who were associated with the defendants. The defendants then caused these associates in the Philippines to transfer funds to accounts controlled by the defendants, the indictment alleges.

In order to operate their illegal payment processing business, the indictment alleges the defendants created a website they called “the Gateway”. The Gateway was an automated collector and processor of illegal internet gambling funding transactions. The indictment alleges that the defendants caused the Gateway to misclassify the transactions to Visa and MasterCard, representing that the transactions were for something other than gambling. In this manner, the defendants assisted illegal internet gambling websites in having their gambling transactions authorized by Visa and MasterCard issuing banks, the indictment alleges.

The indictment further alleges that the defendants used offshore accounts to receive the proceeds of their payment processing business. The defendants then caused this money to be transferred to their client websites. For their services, the defendants collected per-transaction fees from their clients. According to the indictment, the defendants transferred their proceeds to businesses in the United States that they owned and controlled, including Gateway Technologies and Hill Financial. The defendants also used trusts, including Bablcom Domestic Non Grantor Insurance Trust, Landbaron Ultra Trust, Behnke Domestic Non Grantor Insurance Trust, Lime Light Domestic Non Grantor Insurance Trust and Red Dogg Ultra Trust, to conceal their profits from their illegal payment processing business. The defendants then used the funds transferred to trust bank accounts to make investments and to buy real property, cars, and other personal property, the indictment alleges.

None of the defendants are in custody at this time. Richard Carson-Selman was arrested Thursday in Las Vegas. He had an initial appearance in Las Vegas yesterday and was released on conditions under the supervision of pre-trial services. Baron Lombardo will self-surrender in Las Vegas today and will have an initial appearance. All of the defendants are scheduled to be arraigned in U.S. District Court in Salt Lake City on Wednesday, May 30, at 10 a.m. before U.S. Magistrate Judge Paul Warner. The potential maximum penalties for the counts in the indictment include 20 years for racketeering conspiracy; 30 years for bank fraud; two years for transmission of wagers/wagering information; and 20 years for money laundering. Defendants charged in indictments are presumed innocent unless or until proven guilty in court.

The case is being investigated by the IRS Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney D. Loren Washburn of the District of Utah and Marty Woelfle, a Department of Justice trial attorney.

####

**Carlo** · 15 May 2007, 1:56 pm

Originally Posted by ogpaper

I personally would like to hear more from BetUs directly, as the press release from DoJ clearly states that BetUs is being indicted... Not to mention that it seems long time advertisers are steering away - for example, gambling911 stopped using your odds the same day in their articles.

This is a very dangerous situtaion as if all this is actually going on, and it's not just DoJ blowing smoke, BetUs could trun into BetOnSports x 10.

And if the goverment want to recover the money, there is a chance that those customers would have to pay the banks back the money they have deposited at BetUs.

I understand that BetUs is sponsoring some CAP stuff, but, again, this is very serious situation and I am surprised that BetUS have not publicly and openly addressed the situation, either via a press release, or through a post on this and other forums.

If DoJ are actually after BetUs as they state, and BetUs turns into another BetOnSports - I think 80% of the USA betting market will be lost overnight.

Where have Gambling911 stopped using our odds? You can see our advertising all over their website.

As for the clear statement of indictment, it clearly states that

The 34-count indictment alleges BETUS used Hill Financial Services and Gateway Technologies...

It does not say we were indicted, there has not been a "true bill" returned on this.

Also:

Defendants charged in indictments are presumed innocent unless or until proven guilty in court.

**ogpaper** · 15 May 2007, 2:04 pm

Charged in the indictment are Baron Lombardo, age 46, of Las Vegas; Richard Carson-Selman, age 51, of Las Vegas; Henry G. Bankey, age 49, of Las Vegas; Francisco Lombardo aka Frank Lombardo, age 52, of Las Vegas; Count C. Lombardo, age 43, of Las Vegas; Tina I. Hill, age 32, of Sandy, Utah and Las Vegas; Kimberlie Lombardo aka Kittie Lombardo, age 43, of Las Vegas; CurrenC, Ltd., also known as CurrenC WorldWide, LTD., of Road Town, Tortola, British Virgin Islands; Gateway Technologies, LLC., of Draper, Utah; Hill Financial Services, Inc., of Draper, Utah, and Las Vegas, and BetUS of San Jose, Costa Rica and Kanawahke, Canada.

And if you open the indictement from the link below, you will see BETUS listed amoung the defendants.

To me it does not matter if you are innocent or guilty. What matters is that you claim you were simply "mentioned" when the original document states that you are charged.

**vinism** · 15 May 2007, 2:07 pm

The 34-count indictment alleges BETUS used Hill Financial Services and Gateway Technologies...

This is a sentence from the story our reporter wrote about the indictment. We used "alleges" in the sentence because BetUS has not been convicted of anything. These are only charges. But that's what an indictment is. It means you are being charged with something. It doesn't mean you are guilty of anything. And it doesn't take away your presumption of innocence. It simply means the U.S. Attorney's office is charging you with a crime.

**vinism** · 15 May 2007, 2:21 pm

As promised, here's a link to the DOJ/U.S. Attorney's Office press release:

https://www.gpwa.org/news/Lombardo_indictment.doc

**matted** · 15 May 2007, 8:08 pm

This is indeed a very serious situation... Carlo - I have all the respect for you, but this should not be taken lightly or written off. Each of the cases in front of the court right now are litmus tests of the reach of the US DOJ with respect to the current laws and precedents prevailing in the United States.

**bb1web** · 15 May 2007, 10:46 pm

It simply means the U.S. Attorney's office is charging you with a crime

what makes me sick is this is not a US based company. I'd be saying kiss my C - Azz.

firepay is selling out at the first sign of trouble.

**Fergie** · 16 May 2007, 10:03 am

On the one hand you have the United States protesting that the WTO ruling forces the morales of others on them, and on the other hand the Unites States is doing the same to others.

**The Buzz** · 31 May 2007, 7:53 am

All seven defendents were arraigned yesterday and entered not guilty pleas ...

http://deseretnews.com/dn/view/0,1249,660225441,00.html

**GPWA Ryan** · 31 May 2007, 2:42 pm

I called the U.S. Attorney's office. Apparently, BetUS and CurrenC Worldwide, the two bigger names in the idictment, have not yet been served. The Attorney's office said they will be thoough, as soon as they can figure out how to do it.

Indicted financial processing group pleads not guilty

May 31, 2007
by Ryan McLane

Hill Financial Services, Gateway Technologies and seven defendants pleaded not guilty yesterday to money laundering, racketeering conspiracy and bank fraud charges, according to U.S. Attorney Brett L. Tolman's office.

Representatives from BetUS.com and CurrenC Worldwide, two other companies charged in the 34-count indictment unsealed earlier this month in Utah, were not present at the arraignment and have not yet been served, U.S. Attorney spokesperson Melodie Rydalch said.

BetUS does not have a presence in the U.S. which is complicating standard serving procedures and U.S. officials are still unsure which person will be charged on behalf of CurrenC Worldwide, Rydalch said.

The seven defendants, Baron Lombardo, 46, Richard Carson-Selman, 51, Henry G. Bankey, 49, Francisco Lombardo, 52, Count C. Lombardo, 43, Tina I. Hill, 32, and Kimberlie Lombardo 43 are all Las Vegas residents.

The group is accused of deceiving credit card companies by mislabeling more than $150 million in U.S.-based online gambling transactions.

The indictment also alleges that at least one U.S. bank official had been bribed to ensure the transactions were miscoded.

The U.S. Attorney is attempting to recover the $150 million under RICO, the federal Racketeer Influence and Corrupt Organizations law.

"Payment processors who attempt to hide the true nature of the transactions they are conducting and the Internet gambling websites that use these payment processors will be prosecuted and brought to justice," said Tolman in a statement.

A trial date has not been set, Rydalch said. The group is scheduled to appear a trial status conference on August 6 in front of Federal Judge Paul Cassell.

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