A massive online gambling operation was shut down Wednesday with the
indictment of 27 individuals and three corporations on charges of unlawfully
operating a highly sophisticated operation in Queens County and elsewhere in
the world that booked more than $3.3 billion in wages over a 28-month period
on a wide variety of sporting events ranging from horseracing, football,
baseball, basketball and hockey to NASCAR, PGA golf and professional tennis,
among others. “Internet gambling is a multi-billion dollar worldwide
industry that for too long has operated with impunity. This case represents
the first time Internet gambling charges have been brought against anyone in
this country since President Bush signed into law last month the Unlawful
Internet Gambling Enforcement Act which prohibits American online gamblers
from using electronic funds transfers, credit cards and checks in placing
bets with gambling sites worldwide”, Queens district attorney Richard Brown
said. “The case also marks the first time that a web designer and an
offshore based Internet company have been charged with directly
participating in a criminal enterprise. In addition, the $500 million asset
forfeiture case commenced against the defendants is among the largest such
cases ever filed”, he added.
“The defendants are accused of running a tightly knit and an incredibly
lucrative – and illegal – global gambling operation. It is alleged that they
were as savvy and adept in the use of computer technology as they were
proficient in the art of secreting and laundering untold millions of dollars
in unlawfully earned proceeds through casinos, shell corporations and bank
accounts in a variety of locations around the globe, including Central
America, the Caribbean, Switzerland, Hong Kong and elsewhere. So massive was
the enterprise that only with the assistance of federal law enforcement,
police authorities in sister states and other nations have we been able to
bring these defendants to justice”, Brown said.

A 33-count enterprise corruption indictment filed in Queens County Supreme
Court charges that the gambling ring promoted illegal sports betting in
Queens County and elsewhere and that the defendants were involved with
gambling wire rooms in both Miami and St. Maarten. Twenty of the defendants
are also being sued civilly and have been named as respondents in a historic
$500 million civil forfeiture action filed in Queens Supreme Court by the
District Attorney’s Special Proceedings Bureau which alleges that they
engaged in a criminal enterprise that promoted illegal gambling activities
and generated illegal wages.

Brown said that detectives assigned to the New York City Police Department’s
Organized Crime Control Bureau, as well as federal agents throughout the
country arrested the defendants over the past few days on charges of
enterprise corruption, a violation of New York State’s Organized Crime
Control Act, as well as money laundering, promoting gambling, possession of
gambling records and conspiracy.

The investigation leading to the indictment began in July 2004 when NYPD
officers assigned to the Queens Major Case Squad and the Queens Narcotics
District developed information about an illegal betting ring and began a
joint investigation with the District Attorney’s Organized Crime and Rackets
Bureau. The investigation included physical surveillance, intelligence
information and court-authorized electronic eavesdropping on nearly 30
different telephones that intercepted tens of thousands of conversations.

According to the indictment, between July 14, 2004, and Nov. 2, 2006, the 30
defendants conspired to acquire money illegally through the operation of an
unlawful gambling enterprise involving the use of an Internet website.

The indictment also alleges that the ring used a non-traditional “wire room”
in the form of an off-shore, Internet-based gambling service used by bettors
and runners to actually place their wagers. It is alleged that the ring used
the off-shore wire room to maintain the gambling accounts of numerous
runners and bettors through the Internet website in an effort to evade law
enforcement detection through traditional methods.

Law enforcement crackdowns on traditional mob-run wire rooms have led to the
use by illegal gambling rings of off-shore gambling websites where action is
available around the clock. Bettors can click on an off-shore gambling
website over the Internet and be assigned individual login codes and
passwords.

Their wagers and win-loss amounts are recorded in “sub-accounts” maintained
in the accounts of “runners” and “agents.” These gambling websites typically
store their information on computer servers outside the United States, such
as in Costa Rica, and “bounce” their data through a series of server nodes
in an effort to evade law enforcement.

In carrying out the alleged conspiracy, it is charged that Primary
Development, Inc., and its chief executive officer, Maurice Freeman,
developed a sports betting website,specifically tailored to meet the needs
of James W. Giordano and his son-in-law, Daniel B. Clarin. The website,
which is literally a computerized betting sheet, is known as “Playwithal
Sportsbook” and is advertised as an “innovative sports gaming company.”
Playwithal is accessible both online and via an “800” toll-free telephone
number. Although the web page is hosted in Tampa, Fla., its web servers and
wire room terminal are situated outside the United States – on St. Maarten
in the Caribbean or, more recently, in Costa Rica.

In furtherance of the alleged conspiracy, Prolexic Technologies, Inc.,
allegedly provided security of Playwithal’s web servers by screening
bettors’ Internet protocol addresses to search for viruses or tracking
programs that could be used to hack into Playwithal’s servers. Digital
Solutions, S.A., a company incorporated under the laws of Costa Rica, and
its American counterpart, D.S. Networks, S.A., Inc., allegedly provided the
site with its servers, data and software.

The indictment charges that Giordano was the “bookmaker” and boss of the
enterprise who controlled and oversaw the entire operation. The indictment
further charges that Clarin worked as the “controller” and was responsible
for managing the day-to-day operations and handling bettor disputes and
accounting discrepancies, as well as managing account information of the
various runners and bettors.

According to the indictment, Giordano’s wife, Priscilla Ann Giordano, and
their daughter, Melissa Clarin, who is Clarin’s wife, worked as “financial
officers” and facilitated the transfer of monetary instruments representing
gambling proceeds through accounts under their control in financial
institutions overseas and elsewhere.

The indictment also charges that five defendants, Frank Lobascio, Frank
LaMonica, Ralph Piccirilli, Monte Weiner, and Steven C. Tarantino, worked as
“money collectors” and were responsible for exchanging, distributing,
delivering and transferring gambling proceeds between members of the
organization, including to and from agents/runners. Some of the collectors
were also allegedly involved in exchanging, distributing, delivering and
transferring gambling proceeds through various financial institutions.