Sports Bettors Defrauded in "Middling" Scheme
Reno, Nev. – Federal fraud and money laundering charges were filed today against a man who allegedly stole almost $1 million from investors who thought they were participating in a sports betting program with guaranteed returns, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
Yul Na is charged in a criminal indictment with 30 counts of wire fraud, 29 counts of money laundering, and criminal forfeiture. If convicted, Na faces up to 20 years in prison on each wire fraud count, up to 10 years in prison on each money laundering count, a $250,000 fine on each count, and forfeiture of money or property up to $962,350. An arrest warrant has been issued for Mr. Na.
According to the Indictment, beginning in early January 2010, Na allegedly began marketing an investment opportunity to individuals involving the technique of "sports arbitrage" for placing and accepting sports wagers. Na claimed that investors would not lose money if they invested in this technique. Na defined the sports arbitrage program to the investors as "middling," because it involved the combination of betting both sides of the same event, as well as the use of specific timing for the placement of the sports wagers. Na represented that opposing bets were placed at different times to capitalize on the movement in wagering lines by the sports books. Na represented that this placing of bets at different lines or payout ratios created an opportunity for profit.
Na also allegedly told investors that he held an exclusive and binding agreement with Mandalay Bay Resort and Casino to accept large lay-off wagers (a wager made by one bookmaker with another to help balance bets and reduce risk) from their sports book at a discounted rate of 18 percent. Na explained that in order to minimize their risk, he had contracted with an off-shore sports book to bet the other side of the same events for which he had accepted wagers from Mandalay Bay. Na told investors that the off-shore book charged a 10 percent premium on all wagers. Consequently, Na claimed that regardless of the outcome of an event, his sports arbitrage program would always achieve an overall net gain of 8 percent on all lay-off wagers accepted from the Mandalay Bay sports book, the difference between the 18 percent discount at Mandalay Bay and the 10 percent premium charged by the off-shore sports book.
Na allegedly knew that his representations to investors were false and part of a scheme to defraud them of their money. Specifically, Na knew that he did not have in place any system to place bets for the purpose of "middling" sports events and did not have any exclusive agreement with Mandalay Bay to accept lay-off wagers at a discount rate of 18 percent.
The Indictment also alleges that Na instructed investors to make electronic transfers of money to Mandalay Bay Resort and Casino's bank account, with notations for the funds to be applied to the defendant's personal casino account. Na told investors that the funds had to be wired to his personal account because the casino could not accept wagers from any entity other than an individual. Investors wire transferred a total of $962,350 to Na through this process. Na subsequently withdrew the funds and used them to gamble at Mandalay Bay instead of using them for the sports betting investment program.
This case is being investigated by IRS Criminal Investigation and the Nevada Gaming Control Board Enforcement Division, and prosecuted by Assistant U.S. Attorney Drew Smith.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.