By Justin Fenton, The Baltimore Sun
10:10 PM EST, February 28, 2012
An audacious Internet gambling mogul long sought by authorities has been indicted in Baltimore, capping an investigation that spanned nearly a decade and several countries and comes amid a recent crackdown on the popular poker and gambling sites.
Canadian native and Bodog.com founder Calvin Ayre, 50, and three others were charged by a federal grand jury with conducting an illegal sports gambling site and conspiracy to commit money laundering, according to a federal indictment unsealed Tuesday.
Ayre's Bodog brand has became one of the biggest in the world of online sports betting and casino games and propelled him to billionaire status. The indictment alleges that Bodog and its conspirators moved at least $100 million from offshore accounts in Switzerland, England, Malta and Canada to bettors in Maryland and elsewhere, while paying $42 million for advertising to attract U.S. gamblers.
Internal Revenue Service investigators in Maryland have been examining Bodog.com since 2003, according to court documents, with immigration and customs officials joining a formal investigation in 2006.
Bodog.com's site — which the company abandoned last year after other popular gambling domains were shut down in the United States — on Tuesday featured the emblems of the U.S. Department of Justice and Homeland Security Investigations.
"No matter where a corporation is based, they can't run sports betting in Maryland," Rod J. Rosenstein, the U.S. attorney for Maryland, said in an interview. "It's easy for companies to comply with this law by not offering gambling services in places where that service is not legal. The fact that they're located offshore is irrelevant."
But industry and gambling experts say operators of such sites are more likely to shift tactics than shut down. Ayre, for one, contends that online gambling is legal under international law.
Ayre, whose parents were grain and pig farmers in Saskatchewan, appeared on the cover of Forbes magazine's annual ranking of the world's billionaires in 2006 in an article titled "Catch Me If You Can" — a reference to his position in the cross hairs of investigators. He also was featured in People magazine's "hottest bachelor" list.
An outsized personality whose website describes him as an "industry pioneer, megalomaniac and adrenaline junkie," Ayre has been living in exile in recent years. According to news reports, he has taken care not to keep any assets in the U.S. He was not in custody after the indictment.
Ayre released a statement Tuesday through his website denouncing the charges as a media stunt.
"I see this as abuse of the U.S. criminal justice system for the commercial gain of large U.S. corporations," Ayre said in an article posted to calvinayre.com. "It is clear that the online gaming industry is legal under international law and in the case of these documents, is it [sic] also clear that the rule of law was not allowed to slow down a rush to try to win the war of public opinion.
"We will all look at this and discuss the future with our advisers, but it will not stop my many business interests globally that are unrelated to anything in the U.S.," he said.
Though online gambling continues to be a booming, multibillion-dollar industry, transactions related to online gambling are illegal under the Unlawful Internet Gambling Enforcement Act of 2006. Supporters say poker is an American pastime that remains easily accessible for players regardless of such restrictions and should be allowed and regulated in the United States.
Operators of online betting sites and payment processors have previously faced federal charges in Maryland, and Ayre derisively called the charges against him "another notch in the belt" for federal prosecutors here.
Last May, in a crackdown dubbed "Blue Monday" by players, federal authorities based in Maryland shut down 10 poker sites, including Beted.com. In that case, federal investigators set up a phony business called Linwood Payment Solutions and handled $33 million in transactions from Internet gamblers.
That followed the so-called "Black Friday" indictments brought by the U.S. attorney's office in Manhattan in April that rocked the online betting world when it shut down the three most popular online poker sites: Fulltiltpoker.com, Truepoker.com and Absolutepoker.com. The owners of those sites are fighting the charges.
The day after the May indictments were unsealed, Bodog.com changed to a European domain name — Bodog.eu — in an apparent attempt to avoid a crackdown by U.S. authorities. Then, in the fall, Bodog.com was handed over to a site called bolvada.lv.
Ayre has said that he retired and transferred the brand to the Morris Mohawk Gaming Group, which is located near Montreal, Forbes.com reported.
Chris Costigan, publisher of Gambling911.com, said charges against Ayre have been expected for some time. "They were always targeting Bodog, it seemed, and most of the industry realized something was going to happen, they just didn't know when," Costigan said in an interview.
Costigan said many sites since the Black Friday and Blue Monday cases have switched their sites to European domain names to elude seizure by U.S. authorities and continue to operate. For that reason, he said, the indictment against Bodog is unlikely to have a major impact. He noted that cash wasn't seized.
"When they hear money has been seized, then they start to freak out. That's not the situation here, nor is it the situation that their current domains are no longer operational," he said.
But John Warren Kindt, a business professor at the University of Illinois at Urbana-Champaign, said such crackdowns could scare bettors.
Such sites have been "operating on the fringe for years, trying to find gray areas and legal loopholes," Kindt said. "The fact that [the government] is slamming down hard on several at one time is their way of getting the message to the public that gambling on the Internet is a federal crime."
Kindt warned online players that their risk isn't over when they leave the virtual betting table. "It's legally prohibited, but practically foolish" to gamble with sites that aren't regulated, Kindt said.
Gambling sites have gotten away with conducting business in foreign countries and using foreign banks to process transactions for American bettors. But as the industry exploded, many companies have turned to domestic payment processors or set up fictitious companies.
Federal investigators started an account with Bodog six years ago and began placing online bets. Authorities tracked the payments and gained a cooperating witness who told investigators that Bodog made "$250,000 to millions per day on sports bookmaking alone" and had hundreds of employees in Costa Rica and Canada.
In 2008, Maryland IRS investigators seized funds from the bank accounts of three payment processing companies suspected of handling money for Bodog — Georgia companies JBL Services and Transactions Solutions, and the California-based company Zippayments.com, court records show.
Two men connected to those companies, Edward Courdy of Zippayments.com, and Michael Garone of JBL Services, were charged with money laundering in 2008, the Baltimore City Paper reported, and authorities seized more than $23 million. While Courdy's case is no longer publicly available in the federal court database, records show Garone pleaded guilty to processing at least $7.9 million in payments for Bodog in 2008.
Garone's case remained under seal for more than two years because prosecutors said information provided by Garone was being used in investigations in New York and California, and because he was expected to testify at an undisclosed trial in New York. Garone received a year of probation, records show.
The indictment handed up by the grand jury against Ayre was filed by R. Scott Gunn, an Anne Arundel County detective and task force officer with the Homeland Security Investigations. The brief document says an undercover officer set up an account with a company called Ewalletxpress, which Bodog offered as one of its primary deposit methods.
The officer placed bets on Bodog.com, most recently last month, and was able to receive winnings by check, through a bank account in Maryland, and by cash, through Western Union.
Ewalletxpress shut down in November, first citing technical issues, according to Poker News Daily. Later, the company told merchants that it would not be able to continue service "due to a federal warrant issued to seize our funds."
In 2006, when Forbes profiled Ayre, he said his company was handling $7.3 billion in wagers, triple the volume of 2004. While 95 percent of his sales come from the United States, all of his assets were in Bodog's name, and he said he paid no income taxes in Costa Rica, where he lived.
His analysis of gambling laws at that time: "We run a business that can't actually be described as gambling in each country we operate in. But when you add it all together, it's Internet gambling."
Also charged with Ayre are three Canadian men described as operators of the site: Jason Philip, 58, and David Ferguson and Derrick Maloney, whose ages were not given. If convicted, each could receive up to 20 years in prison on the money laundering charge and five years on the illegal gambling count.
Bodog.com faces a maximum fine of $500,000 on each of the two counts. Initial appearances have not been scheduled, and it was unclear whether Ayre would turn himself in. Rosenstein said his office would "pursue all legal remedies to ensure the defendants are called to stand trial for the allegations."
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