Las Vegas sportsbook operator CG Technology, the sports betting affiliate branch of financial firm Cantor Fitzgerald, has agreed to pay $22.5 million to the U.S. government for its role in an illegal gambling and money laundering scheme, authorities announced Monday.
The settlement is the result a multipronged investigation that began in January 2013 and included U.S. attorneys in New York and Nevada, the U.S. Postal Service, the Internal Revenue Service and the New York City Police Department.
Investigators said the scheme involved an illegal gambling and bookmaking operation, identified by authorities as the "Jersey Boys." The group included a Florida bettor who owned a pick-selling service, an offshore sportsbook located in Costa Rica and executives at CG Technology's Nevada sportsbook.
CG Technology operates the sportsbooks at the M Resort, Cosmopolitan, Venetian, Palms and Tropicana, among others, in Las Vegas.
The Wall Street Journal first reported the settlement, which is a nonprosecution agreement that requires CG Technology to pay $16.5 million to the U.S. attorney offices in New York and Nevada and an additional $6 million to the Treasury Department's Financial Crimes Enforcement.
According to the statement of facts released by the Justice Department along with the settlement, from 2009 through 2012, CG Technology, then doing business as Cantor Gaming, knowingly allowed the "Jersey Boys," to place bets at its licensed Nevada sportsbook.
Former Cantor Gaming vice president of risk Mike Colbert previously pleaded guilty to federal conspiracy charges from the case and faces up to five years imprisonment.
Authorities said Colbert and staff would approach and encourage associates of the "Jersey Boys" to take specific sides of games that had attracted lopsided betting action, allowing the book to lay off some of its risk. According to the statement of facts, Colbert emailed someone identified as Cantor Executive No. 1 multiple times about "buy back from jersey."
Authorities say that after being informed of a potential $300,000 loss in April 2010, Cantor Gaming Executive No. 1 sent Colbert an email response: "That's unacceptable mike this has to stop we have given back out whole year and then some. I don't know what to say. I will be crucified in NY. We better come up with some strategy."
Authorities did not name Cantor Executive No. 1 in the settlement but identified the person as president and chief executive officer of the company at all relevant times, who recently resigned from the company in late August as a result of a separate action brought by Nevada Gaming Commission.
In July, Nevada gaming regulators fined CG Technology $1.5 million for inaccurate payouts and forced president and CEO Lee Amaitis to resign.
Nevada Gaming Control originally fined then-Cantor Gaming a record $5.5 million for failing to discover that Colbert was accepting illegal bets. The $5.5 million, at the time, was the largest fine in Nevada gaming history.
Nevada Gaming Control Board Chairman A.G. Burnett says his office is reviewing the Justice Department findings released Monday.
"As long as everything is within what we already settled with them for in 2014, then there likely won't be any further action by the board," Burnett said. "However, if there is something new, it could be a different story."
Authorities also did not name the Florida bettor but said he or she was the "owner of a tout service that advised clients on how to bet on sporting events." The authorities also said that on Sept. 7, the bettor pleaded guilty in U.S. district court in Wisconsin to wire fraud, extortion and interstate travel in aid of racketeering.
Florida betting tout Adam Meyer, a former bettor at CG Technology, pleaded guilty to extortion and racketeering charges in U.S. district court in Wisconsin on Sept. 7.
CG Technology did not respond to a request for comment.