Cantor-Funded Business Said to Pay $22.5 Million to End ProbeBy and
CG Technology also investigated over money laundering
Ex-CG official pleads guilty to illegal gambling involvement
A Cantor Fitzgerald LP-funded race-book and sports-book business agreed to pay $22.5 million to settle investigations that it engaged in illegal gambling and money laundering.
CG Technology reached the accord to resolve investigations by U.S. Attorneys in Brooklyn, New York, Las Vegas, Nevada and the Treasury’s Financial Crimes Enforcement Network. Under the deal the company won’t be prosecuted criminally because it cooperated with the government investigation and has taken steps to fix its practices, Brooklyn U.S. Attorney Robert Capers said.
Michael Colbert, whose job was to set the lines and odds for betting at the business, pleaded guilty to taking part in an illegal gambling operation and faces as long as five years in prison, Capers said.
Cantor, a bond-trading firm, got involved in gaming through a plan to apply Wall Street technology to transform sports betting. Called Cantor Gaming, it expanded with deals to handle the sports book at many of the casinos on the Las Vegas strip. Cantor distanced itself from gambling in 2014, changing the name and putting out a statement saying it owned no equity in the business.
"Cantor Gaming bet on never getting caught but this wager didn’t pay off," said Richard Weber, chief of the Internal Revenue Service’s Criminal Investigations unit. "This large scale illegal bookmaking investigation uncovered the kind of wide-spread corruption that is too often associated with criminal enterprises."
Karen Laureano-Rikardsen declined to comment on behalf of CG Technology.
Cantor Gaming’s strategy to grow and attract big bettors involved offering higher betting limits than other sports books and gave important customers preferential treatment, including direct access to Colbert, prosecutors said. Colbert would accommodate the VIPs by letting them make wagers through proxies, in violation of Nevada law, prosecutors said.
From 2009 to 2013, Colbert and his staff also allowed the preferred customers to make bets from out-of-state and processed large deposits and withdrawals for them, according to prosecutors. That allowed at least two high-volume bettors who ran illegal bookmaking operations to launder their illegal proceeds, the U.S. said.
The trouble started in 2012, when Colbert, who had been director of risk for the firm’s sports book, was arrested for his role in an illegal gambling ring known as the “Jersey Boys." Colbert allowed the leaders of the ring to use runners to place bets on their behalf, according to prosecutors. He pleaded guilty and has yet to be sentenced.
His lawyer, Murray Richman, didn’t immediately respond to a voicemail, left at his office, seeking comment on the case.
In 2014, Cantor Gaming agreed to pay $5.5 million to the Nevada Gaming Control Board over related allegations. In 2016, it agreed to pay a $1.5 million fine to the Nevada regulator over shorting some bettors. Lee Amaitis, the head of the gaming business, agreed to resign as part of that settlement.