CG Technology’s role in the money laundering is thought to have stretched from 2009 to 2013.
CG Technology, a top Nevada sports betting operator, agreed to $16.5 million settlement with federal and state agencies over connections it allegedly had to illegal gambling and money laundering operations. The wrongdoing is thought to have gone back to the time CG Technology was known as Cantor Technology.
The investigation included 5 different federal and local offices: the IRS Criminal Division, The US Postal Inspection Service, the New York Police Department, and the U.S. Attorney offices for the District of Nevada and the Eastern District of New York. Those agencies combined worked over a several-year period to investigate the connection between CG Technology and an illegal wire service used for sports betting.
Pinnacle Sports and the Jersey Boys
The illegal sports betting operation was known as Pinnacle Sports, a Costa Rican-based online sportsbook which operated illegally for years. One CG Technology executive pleaded guilty to conspiracy, because he knew “runners” for the so-called “Jersey Boys”. The Jersey Boys were a Queens-based illegal betting operation which ran bets for their syndicate through the Pinnacle Sports website.
When Cantor Technology came to Nevada, it was given a lot of positive attention. As the sports betting wing of Cantor Fitzgerald, a Wall Street financial services firm, it was considered a new and innovative brand in the market.
Eric Capers on the Crimes
Eric Capers, the US Attorney for Eastern New York, said that Cantor’s sports betting success “came at the expense of compliance with the law.”
Illegal gambling operations need to move their money through the legal financial system, making it harder to track for auditors from tax offices. The process is called money laundering, because it takes dirty money and supposedly makes it spendable. Paying the vigorish on the action from a real sportsbook is a small price to pay for laundering illegal cash.
In the press conference to announce the fine, Eric Capers added that Cantor/CG Technology “became a place where at least two large-scale illegal bookmakers could launder their ill-gotten proceeds.”
Daniel Bogden on Messenger Betting
Daniel Bogden, the US Attorney for the Nevada District, added that CG Technology made profits by “accepting messenger betting, out-of-state betting and processing large amounts of monies which were the proceeds of illegal activities.”
When it came to its agreement with the financial agencies, CG Technology admitted to a pattern of wrongdoing from 2009 to 2013, when the investigation came to light. At the time, Cantor Technology’s VP of Risk, Mike Colbert, was indicted for his role in the money laundering scheme. Mike Colbert pleaded guilty to a conspiracy charge in October 2013. In all, 25 people were indicted in the investigation.
Philip Barlett Described “Total Disregard”
Officials piled on in their criticism of CG Technology. USPIS Inspector General Philip Bartlett said CG Technology “ran its enterprise with total disregard for government regulations and the penalties associated with breaking the law.”
Richard Weber, the Chief Investigator for the IRS in the case, compared the company’s brazen disregard for federal regulations to the contempt organized crime has shown in the past. Weber said the joint investigation had “uncovered the kind of widespread corruption that is too often associated with criminal enterprises.”
CG Technology’s Multiple Fines
This is just the latest financial hit for CG Technology, stemming from financial misconduct. Earlier, CGT paid a $5.5 million fine to Nevada’s gaming regulators for their lack of oversight for Mike Colbert’s misconduct.
More recently, CG Technology paid an additional $1.5 million fine to the same Nevada gaming regulators for a glitch which overpaid some gamblers, while underpaying others on parlay wagers. As one might expect, most of the gamblers on the sports bets were underpaid.
Lee Amaitis’s Issues
The Pinnacle Sports case was not the only trouble spot for Cantor Sports. Even before its move to the Nevada gaming market, former Cantors Sports CEO Lee Amaitis was investigated for his ties to what Calvin Ayre dotcom called a “multimillion-dollar drug ring that was peddling cocaine at Wall Street firms.”
The Cantor Sports case led to the fall of Lee Amaitis from his position as chief executive.
