Madison, Wisconsin -- Grant C. Johnson, United States Attorney for the
Western District of Wisconsin, announced today that Duane Pede, age 52,
of Amherst Junction, Wisconsin, and Jeff D'Ambrosia, age 42, of Henderson,
Nevada, pleaded guilty to gambling and tax charges in United States District
Court in Madison. A foreign corporation, Gold Medal Sports, which operated
on the Island of Curacao in the Dutch Netherland Antilles, also entered
a guilty plea to racketeering and a criminal forfeiture count today.
The corporation has agreed to forfeit more than $3.3 million in criminal
earnings, and Pede and DAmbrosia will pay over $1.4 million in back
taxes. The guilty pleas cap the initial phase of a three-year undercover
and financial investigation into illegal offshore sports bookmaking and
sports handicapping telemarketing services.
Pede and D'Ambrosia pleaded guilty to an information that charged both
men with violating the Wire Wagering Act. The maximum penalty for this
charge is two years in prison, a $250,000 fine, and a one-year term of
supervised release. Pede and DAmbrosia each pleaded guilty to filing
a false 1998 federal income tax return. The maximum penalty for this offense
is three years in prison, a $250,000 fine, and a three-year term of supervised
release.
As part of the plea agreement, Pede and D'Ambrosia agreed to: (1) cooperate
with authorities; (2) pay the maximum fine allowable under the U.S. Sentencing
Guidelines; and (3) pay $1,429,565 in back taxes to the Internal Revenue
Service.
Gold Medal Sports pleaded guilty to one count of racketeering and one
count of criminal asset forfeiture. As part of the plea agreement, the
corporation agreed to: (1) forfeit $3,336,087 in criminal earnings; and
(2) publish a disclaimer in the USA Today regarding its lack of inside
information in its sports handicapping services.
United States District Judge Barbara B. Crabb scheduled sentencing for
the three defendants for February 26, 2002, at 1:00 pm.
According to the first information, Pede and D'Ambrosia were engaged in
the business of wagering and sports betting through an entity called Gold
Medal Sports Book, located in Curacao, N.V., from August 1996 to April
2000. Gold Medal Sports took sports wagers from customers in the United
States over the telephone lines and the Internet. Pede and D'Ambrosia
had Gold Medal Sports mail brochures to U.S. residents advertising its
sports book services and soliciting U.S. residents to place sports wagers
over the phone from the United States to Curacao. The publishing of these
brochures was done by a publishing company also owned by Pede and D'Ambrosia.
The Gold Medal Sports advertising brochures would often be mailed out
in conjunction with the mailing of information for one of the four handicapper
services also owned and operated by Pede and D'Ambrosia Jeff Allen
Sports, Mike Wynn Sports, Razor Sharp Sports or Dan Pastorini Sports.
All of these mailings came out of Stevens Point, Wisconsin.
The information alleges that Gold Medal Sports handled phone and Internet
sports bets from U.S. customers in excess of $33,000,000 for 1996, $167,000,000
for 1997, $119,000,000 for 1998, $78,000,000 in 1999, and $5,700,000 in
the first quarter of 2000. The information specifically alleges that on
October 27, 1999, an Internal Revenue Service, Criminal Investigation
Division (IRS-CID) undercover agent placed a sports wager over the phone
from Beloit, Wisconsin to Gold Medal Sports in Curacao, for $1,000 on
the Green Bay Packers to beat the Seattle Seahawks by more than five points
on Monday Night Football on November 1, 1999. This violates the Wire Wagering
Act, which makes it a felony to operate a gambling business and accept
sports wagers over the phone lines or Internet from customers in the United
States.
The information also charges both defendants with filing a false 1998
federal income tax return. According to the information, the returns were
false because the defendants failed to inform the Internal Revenue Service
that they had foreign bank accounts.
The second information charges Pede and D'Ambrosia's company, Gold Medal
Sports, with gambling, money laundering, mail fraud and racketeering.
According to the second information, Gold Medal Sports through its majority
stock owners, Duane Pede and Jeff D'Ambrosia, conducted the affairs of
a racketeering enterprise using a combination of foreign and domestic
corporations all of which were owned and controlled, in part, by Pede
and D'Ambrosia.
The information alleges that Pede and D'Ambrosia owned Sports Spectrum
LLC, which was a limited liability corporation made up of two companies
NSN Inc and The Scoreboard Inc. D'Ambrosia was the majority stockholder
of NSN, Inc. Pede was the controlling owner of The Scoreboard, Inc. According
to the information, Sports Spectrum was incorporated on July 20, 1995,
and had offices located in Las Vegas, Nevada (where D'Ambrosia worked)
and Nelsonville, Wisconsin (where Pede worked). Sports Spectrum LLC was
engaged in a variety of operations including: (1) providing up-to-the-minute
betting lines for sporting events over the phone for a fee; (2) providing
up-to-the-minute scores on sporting events over the phone for a fee; (3)
selling guaranteed winning picks on sporting events over the phone for
a fee using one of four handicapper services called Jeff Allen Sports,
Mike Wynn Sports, Razor Sharp Sports, and Dan Pastorini Sports; (4) sports
betting and online casino gambling through one of two sports books
Gold Medal Sports and Seven Palms Casino; and (5) providing access to
the Internet through a company called Sports Spectrum Internet Services.
The second information further alleged that the racketeering enterprise
supported and promoted the illegal activities of Gold Medal Sports by
1) combining the direct mailing program of the handicapping services with
Gold Medal mailings; 2) using their publishing company to do all the print
and mail work for all of the related entities; 3) having Sports Spectrum
telemarketers refer handicapping customers to Gold Medal for betting;
and 4) sharing accounting staff, computer staff, database support staff,
and managers.
According to the second information, the gambling charges stem from Wire
Wagering Act violations dealing with sports bets placed by undercover
IRS-CID agents over the phone and Internet in Wisconsin with Gold Medal
Sports in Curacao. The money laundering charges stem from twenty-one identified
wire transfers or check disbursements, made in excess of $10,000, with
Gold Medal betting funds. The identified money laundering transactions
total in excess of $3,200,000 over a three-year time span.
The final set of charges in the second information relate to mail fraud
counts. According to the information, Pede and D'Ambrosia's company, Sports
Spectrum, solicited customers through false advertising to call one of
four sports handicapper services (Jeff Allen Sports, Mike Wynn Sports,
Razor Sharp Sports, and Dan Pastorini Sports) for the purpose of receiving
"guaranteed" winning picks on upcoming sporting events. Once
a customer called one of the four handicapper services, phone salesmen
or "touters" would make and use false pretenses, statements
and representations in an attempt to sell weekly or monthly "winning"
pick packages to the customer.
According to the second information, of the four sports handicapper services
operated by Sports Spectrum, two of them were totally fictitious, that
is, sports handicappers Mike Wynn and Sam Sharp were not real persons.
The ultimate picks for Mike Wynn and Sam Sharp were decided by Duane Pede
or Jeff D'Ambrosia. Further, the second information alleges that sports
handicapping service Dan Pastorini Sports was a front. Dan Pastorini was
paid by Sports Spectrum to pose for pictures and make some radio appearances.
Pastorini was not involved in any sports handicapping whatsoever, and
did not make any of the picks or obtain any of the information attributable
to him in the advertising and phone scripts. Jeff D'Ambrosia made the
picks for Dan Pastorini Sports.
The second information alleged that Sports Spectrum engaged in false,
deceptive and misleading advertising to customers by engaging in a direct
mailing program that included letters and brochures from the four sports
handicapping services. The direct mailing program also included mailing
out game schedule/scoring booklets that contained advertisements for the
four sports handicapping services. These letters and ads in the schedule/scoring
booklets contained false, deceptive and misleading information in that:
(1) they depicted fictitious people (Mike Wynn and Sam Sharp) and attributed
to these people equally fictitious backgrounds, histories, and information
obtained from inside sources; (2) they falsely depicted Dan Pastorini
as a source of information for winning picks because of his network of
contacts in the NFL and sporting world; and (3) they falsely claimed that
Wynn, Sharp and Pastorini had "inside information," "inside
contacts," "contacts at the stadium," "confirmed unpublished
injury information," "direct from the locker room information"
"privileged team information," and that "my crew of scouts
has relayed pertinent information," which allowed them to make "guaranteed"
winning picks on upcoming sporting events.
The second information further alleged that as part of the direct mailing
program, copies of brochures for Gold Medal Sports were included in solicitation
letters or scoring booklets. On other occasions, Gold Medal Sports used
the Sports Spectrum mailing list to send brochures directly to Sports
Spectrum customers in Gold Medal Sports envelopes. These brochures advertised
how to set up an account at Gold Medal Sports, the toll-free phone number
to call, how to send in money, the minimum and maximum bet amounts, the
betting rules and regulations, the types of acceptable bets and timing
of those bets, and how to get winnings back without reports being filed
with any government institutions.
Michael Chertoff, Assistant Attorney General for the Criminal Division,
United States Department of Justice, said, "This prosecution reflects
the Justice Department's continued commitment to vigorously investigate
and prosecute illegal offshore sports betting operations. Those individuals
that continue to target bettors in the United States to place wagers over
the phone or internet will be pursued to the fullest extent under the
law."
United States Attorney Johnson commented that "The Department of
Justice has a history of aggressively prosecuting these types of cases."
The first such prosecution occurred in 1998 in the Southern District of
New York with a case against Jay Cohen, part-owner of World Sports Exchange,
who operated an offshore sports book in Antigua. A jury convicted Cohen
of violating the Wire Wagering Act in February 1999. The conviction was
affirmed by the Second Circuit Court of Appeals on July 31, 2001.
In January 2000, federal prosecutors in St. Louis, Missouri charged Marc
Meghrouni and Scott Shaver, owners of Paradise Casino, who operated an
offshore sports book in Curacao, with violating the Wire Wagering Act,
as well as tax fraud. Additionally, Paradise Casino was charged with money
laundering relating to the spending of betting funds in the United States.
Meghrouni, Shaver and Paradise pled guilty to all of the charges and agreed
to forfeit a one million dollar condominium, and a 1995 Lamborghini.
United States Attorney Johnson also said that "Bettors need to know
it is against the law to place sports bets with offshore sports books."
Johnson praised the combined efforts of four law enforcement agencies
in working together to make the case. The charges against Pede, D'Ambrosia
and Gold Medal were the result of an investigation conducted by agents
with the Internal Revenue Service, Criminal Investigation Division; United
States Postal Inspection Service; the Federal Bureau of Investigation;
and the State of Wisconsin Department of Justice, Division of Criminal
Investigation, Gaming Enforcement Bureau.
###
|