Legal Sports Report …
Three Major League Baseball players worked for a multimillion-dollar illegal sports betting ring based in California and Costa Rica, according to federal documents unsealed Wednesday.
The former MLB players serviced a client list including “current and former professional athletes,” per a press release from the US Department of Justice. Over 20 years, the operation booked millions of dollars in bets, with assistance from a Costa Rican call center and website called Sand Island Sports.
Five men pleaded guilty to multiple federal charges:
- Wayne Nix, 45, Newport Coast
- Edon Kagasoff, 44, Lake Forest
- Howard Miller, 63, Gardena
- Kenneth Arsenian, 52, Newport Beach
- Joseph Castelao, 56, Rancho Palos Verdes
A Sherman Oaks, Calif., check-cashing business also admitted to money laundering related to the ring.
Which pro athletes took part in illegal sports betting?
Neither the DOJ release nor plea agreements for four of the defendants list the identities of professional athletes who worked for Nix or placed bets through his shop. Documents also reference an unidentified sports broadcaster who refinanced his home to pay his debts to Nix, who subsequently reactivated the broadcaster’s account.
Beginning in 2016, Nix received $245,000 from a pro football player, $8,000 from a baseball analyst, and $4,000 from an MLB coach to cover respective gambling losses. He also recruited a former professional football player to work for him that year by offering a commission on losses of two new bettors.
In 2019, Nix took a $5 million bet on the Super Bowl. The same year, Kagasoff negotiated $25,000 limits for the business manager of a professional basketball player to bet on NBA games.
Details of California illegal sports betting operation
Prosecutors said Nix, a former minor-league baseball player, began the bookie operation about 20 years ago. Kagasoff joined Nix in 2014 and helped move the business online through Sand Island Sports, the Costa Rican outfit owned by Castelao.
The former MLB players became involved through Nix’s contacts in the sports world. According to court documents, the players acted as agents who recruited bettors to the shop and managed their accounts.
Bettors established those accounts through the Sand Island Sports website and call center, where they found odds and placed wagers. Nix handled most of the money collection and payout for sports betting in California. Sand Island Sports received a fee for every active bettor who wagered using its platform, paid via Nix.
Cash washed through a check shop
Sherman Oaks Check Cashing helped launder money for at least some customers of the bookie shop. According to the DOJ press release, the company:
admitted that it encouraged customers to bring large business checks – far in excess of the $10,000 that normally triggers a Currency Transaction Report (CTR) to federal authorities – and employees of the company told customers that it would not file CTRs.
The press release hints at the potentially massive scale of the illegal sports betting operation, detailing how two customers of Nix’s operation cashed at least $18.35 million in checks. Court records do not make clear what portion of that money came via illegal sports betting.
How illegal bookie ran his shop
Court documents state that Nix facilitated much of the illegal bookmaking via agents like the unnamed MLB players:
Nix recruited agents from his current roster of bettors by offering them a commission for new bettors. (He) also recruited agents from competing bookmakers by offering the agents a larger commission and lower fees.
Nix used two different methods of paying the agents:
- If Nix took on the risk of paying out winnings, Nix would receive the majority of bettors’ losses and cut in agents from those losses.
- If the agent bore the risk of covering winnings, he would keep most of the player’s losses and pay Nix a fee “per player per week.”
You wanna drive my Ferrari?
The latter method could lead to money problems for agents, even those who are former professional athletes.
In 2017, one of the former MLB players working as an agent needed a loan from Nix. The player needed help covering winnings for a whale who bet $1 million annually.
He approached Kagasoff to ask Nix for the loan, offering the use of his Ferrari for a month in exchange.
Charges against California bookie operation
The defendants all entered plea agreements covering a variety of financial crimes.
The charges include:
- conspiring to operate an illegal sports gambling business;
- aiding and abetting the operation of an illegal sports gambling business;
- operating an illegal sports gambling business
- accepting a financial instrument for unlawful internet gambling
- filing a false tax return;
- money laundering;
- failing to maintain an effective money laundering program
Time to pay up
Nix filed false returns in 2017 and 2018, leaving out nearly $1.5 million in income. His penalties include more than $1.2 million in back taxes and $1.3 million in forfeited assets from previous federal seizures.
Arsenian underreported his income to the IRS by $2.8 million from 2015 to 2018. He will pay $1.1 million in back taxes and forfeit more than $340,000 in seized assets.
Sherman Oaks Check Cashing paid a $500,000 fine, the most allowed under federal law.
The IRS Criminal Investigations and Homeland Security Investigations units continue to look into the case.
Source: https://www.legalsportsreport.com/67197/feds-bust-illegal-sports-betting-ring-mlb-players/
