US authorities begin prosecutions in multi-million-dollar betting scam

US Federal authorities have released details of a multi-million-dollar illegal gambling and sports betting ring involving current and former professional athletes and a Costa-Rica based gambling site.

Documents were unsealed last week in the US District Court, in which the parties behind the site plead guilty to conspiracy charges after admitting they took millions of dollars in bets facilitated by the site.

The owner of the online gambling business and website pleaded guilty earlier this month and admitted the business was illegal under California law because it involved at least five people, operated for at least six years, and often took gross revenue of well over $2,000 in a single day.

One of the ring leaders of the scheme also admitted failing to report to the IRS more than $1.5m in income he received from the scheme over a two-year period.

Plea agreements were published concerning four individuals taking part in the scheme.

Former minor league baseball player Wayne Nix and Nix’s partner Edon Kagasoff were each charged with one count of conspiring to operate an illegal gambling business, and in the case of Nix charged with filing a false tax return.

Through his contacts in the sports world, Nix developed a client list that included current and former professional athletes, and he employed three former Major League Baseball players to assist with the business.

Kagasoff joined Nix in the gambling operation around 2014, and they used an online infrastructure and call center operated by Sand Island Sports to create accounts for bettors, paying winning bets and retaining nearly all of the money collected from bettors.

Nix’s plea agreement outlines specific incidents related to the betting scheme, including receiving payments for gambling losses from a professional football player, a Major League Baseball coach, and a baseball analyst.

The plea agreement also discusses a bettor who wagered $1 million a year with Nix’s operation, a $5 million bet on the 2019 Super Bowl, and a sports broadcaster who told Nix he was going to refinance his home to pay off gambling debts.

In relation to the tax count against him, Nix admitted receiving $1,466,947 in income that he failed to report on his 2017 and 2018 federal income tax returns, agreeing to pay back $1.2m in back taxes as well as forfeiting another $1.3m seized in February 2020 from bank accounts.

Another individual, Howard Miller was charged with aiding and abetting the scheme by assisting in the collection and payout of gambling proceeds related to the Costa Rica-based website.

Celebrity Financial LLC, a business used as part of the scheme, was charged with failing to maintain effective money laundering controls relating to the cashing of $18m in checks from the operation.

Earlier this month, the Justice Department unsealed cases against two other defendants, Kenneth Arsenian who pled guilty on four charges including accepting a financial instrument for unlawful internet gambling, and Joseph Castelao, who pled guilty to operating illegal gambling.

Officials from Homeland Security Investigations (HSI) and the IRS’s Criminal Investigation department have taken part in the ongoing investigation.