The U.S. District Court for the District of Columbia issued a consent order of forfeiture today ordering the civil forfeiture of $6,976,924 traced to international money laundering of the proceeds from an offshore Internet gambling operation that illegally targeted U.S. residents, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Richard Weber, Chief of the Internal Revenue Service-Criminal Investigation (IRS-CI). The civil forfeiture action was resolved in connection with the criminal prosecution and recent conviction of William Paul Scott for violations of the Wire Act and money laundering statutes.
On Dec. 15, 2003, the U.S. government filed a civil forfeiture action against approximately $7 million held by Soulbury Limited, a shell company controlled by Scott and used to conceal the profits he gained through his illegal offshore Internet gambling operations. The government alleged that the $7 million held by Soulbury were proceeds of Wire Act violations and were subject to forfeiture as property involved in or traceable to money laundering transactions.
According to the civil forfeiture complaint, between 1997 and 2002, Scott and an associate operated World Wide Tele-Sports (WWTS), an Internet gambling operation located in Antigua. WWTS and related entities offered online sports betting services that had been heavily marketed to U.S. gamblers via the Internet and print and broadcast media. U.S. residents, who made up the vast majority of WWTS’s clientele, purchased “credit” for their Internet gambling accounts over the phone or online, and sent hundreds of millions of U.S. dollars out of the United States to WWTS’s offshore bank accounts. The U.S. gamblers then used these credits to place bets on popular professional and collegiate sporting events such as the Super Bowl and the National Collegiate Athletic Association’s men’s basketball tournament. Soliciting sports wagers over the Internet violates the Wire Act.
Based on the significant formal legal assistance provided by relevant authorities in the Bailiwick of Guernsey, the United States filed the civil forfeiture complaint against WWTS criminal proceeds physically located in Guernsey, but seized $6,976,924 from a correspondent bank account in the United States held by the Royal Bank of Scotland International (Guernsey). The seizure marked the United States’ first use of a legal provision that Congress designed to overcome situations that might prevent full cooperation in forfeiture matters even where both jurisdictions wish to completely fulfill their legal forfeiture assistance obligations under the applicable bilateral and UN assistance treaties (18 U.S.C. § 981(k).
In March 1998, over five years before the civil forfeiture complaint was filed, Scott was charged in U.S. District Court in the Southern District of New York, by criminal complaint, with conspiring to violate the Wire Act, relating to his operation of WWTS. But because Scott resided in Antigua, the United States could not execute the warrant issued for his arrest and he remained at large. Even as the criminal complaint against Scott remained outstanding, Soulbury filed a claim on March 1, 2004, answered the civil forfeiture complaint and proceeded to contest the civil forfeiture action.
In April 2004, Scott was indicted in U.S. District Court in the Southern District of New York on the conduct that formed the basis for the 1998 criminal complaint. In April 2005, Scott was indicted in the District of Columbia based on different criminal conduct, charging him with money laundering, violations of the Wire Act and other offenses relating to WWTS. In February 2012, the indictment in the Southern District of New York was transferred to the District of Columbia so that it could be resolved by a plea agreement that covered both pending criminal cases. Scott returned to the United States to enter a guilty plea in both cases in U.S. District Court for the District of Columbia on Sept. 25, 2012.
Scott was convicted of one count of conspiracy to violate the Wire Act and three counts of international money laundering. As part of his plea agreement, Scott consented to the civil forfeiture of the $6,976,924 in proceeds traced to Royal Bank of Scotland International (Guernsey).
Scott is scheduled to be sentenced on Jan. 7, 2013. He faces a maximum penalty of 20 years in prison for each money laundering count and a maximum of two years in prison for the conspiracy count.
The civil forfeiture case was litigated by Assistant Deputy Chief Jack de Kluiver and Trial Attorney Robert Stapleton of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the related criminal cases in the District of Columbia were prosecuted by Trial Attorneys Robert Stapleton and Brian Harrison of the Asset Forfeiture and Money Laundering Section. The criminal case in the Southern District of New York was prosecuted by Assistant U.S. Attorney Arlo Devlin-Brown. The criminal cases were investigated by the FBI in New York and the IRS-CI’s International Grand Jury Task Force out of the Washington, D.C., Field Office.