Costa Rica-based betting operator 5Dimes has agreed to pay a $46.8m settlement to the Department of Justice following an investigation into the operator illegally targeting US customers and announced it plans to enter the US regulated market.
The agreement ends an investigation from the United States Attorney’s Office for the Eastern District of Pennsylvania, in conjunction with the Department of Homeland Security Investigations, that started in 2016. It follows the operator’s decision to block all US customers earlier this month.
At the time, it hinted at an attempt to seek licenses in the US and following the settlement, it has confirmed this is the case, under a new corporate structure.
In addition, it explained the decision to block US customers, effective 25 September, was part of the settlement.
“5Dimes has entered into a settlement agreement with the United States Attorney’s Office for the Eastern District of Pennsylvania that will allow the company to enter the legal, regulated US gaming industry under a new corporate structure, free and clear of any restrictions on the transfer of its assets and in compliance with US law,” the operator said.
“We look forward to relaunching 5Dimes as a sportsbook and casino in the legal, regulated US market and bringing the same experience to all of our customers.”
The Attorney’s Office said that 5Dimes had accepted wagers from and made payouts to US bettors since at least 2011, and obscured more than $46.8m in proceeds US betting from the authorities.
It said that 5Dimes used third-party payment processors to obscure credit card charges for its products, to avoid having transactions blocked by the providers. These funds were then transferred to bank accounts operated by shell companies.
“Through our 5Dimes investigation, Homeland Security Investigations illuminated a massive global network of criminals whose profession was to launder proceeds for drug cartels, kleptocratic regimes, illegal mining operations, and fraudsters,” Brian A. Michael, special agent in charge at Homeland Security Investigations Philadelphia, said.
“Today’s announcement of the global settlement agreement and significant monetary seizures demonstrates HSI’s commitment with our partners to deny criminal organizations the financial proceeds of their illicit activities.”
William McSwain, US attorney for the Eastern District of Pennsylvania, said the deal was the result of years of hard work from his staff.
“The settlement agreement announced today is a victory for the United States in ceasing the illegal activity of a company that was being investigated for a multitude of crimes, including a sophisticated money laundering operation,” McSwain said.
“It is also a testament to the dedication of the investigators and prosecutors who doggedly pursued this case even after the primary target was kidnapped and murdered.
“As the Office has done with a variety of criminal and civil matters, we will use every tool at our disposal to hold individuals and businesses accountable and ensure their compliance with federal law.”
5Dimes said that its owner, Laura Valera, voluntarily contacted the office “to resolve any prior criminal activity by 5Dimes” following the abduction and murder of her husband and former 5Dimes owner William ‘Tony’ Creighton.
“It has been a very difficult two years for me and my family,” Varela said. “But today marks a pivotal turning point and a fresh start for me and the 5Dimes brand, as well as a milestone for the legalization of sports gaming in the US.
“My husband’s death was tragic, but he loved 5Dimes and all of its loyal customers. Now his spirit will be able to live on as the 5Dimes brand begins this new chapter,” Varela continued. “Along with a team of trusted advisors, I am exploring how we might relaunch 5Dimes as a legal sportsbook and casino in the legal, regulated US market to continue serving our many loyal customers.”
Stephen A. Miller of Cozen O’Connor, a lawyer for Valera, argued that it would be in the interest of regulators to license 5Dimes in order to encourage other offshore sportsbooks to also cease accepting US customers.
“Laura presents US regulators with a tremendous opportunity – she is the new owner of a tremendously respected brand that voluntarily settled its exposure with US prosecutors and became compliant with U.S. law so that it could serve customers in appropriate jurisdictions,” Miller explained.
“If the regulators refuse to license an innocent owner like Laura, then no other offshore sportsbook will even bother to try to clean up its act and follow her lead.”
The attorney’s office noted that Valera was “never employed as a manager at 5Dimes, nor did she exercise any control over the operations of 5Dimes”.
The Department of Homeland Security Investigations (HSI) seized approximately $3.4m worth of cash and other assets, including two rare basketball cards and $715,000 worth of rare coins. Costa Rican authorities, meanwhile, have seized around $2m of assets, all of which 5Dimes and Valera will forfeit.
5Dimes and Valera have “agreed to help in the collection and forfeiture” of more than $26m worth of further assets and “to pay and consent to the forfeiture of an additional $15m”. The Attorney’s Office will now agree not to prosecute 5Dimes or Valera for any crimes committed prior to 30 September, 2020.
The Mid-Atlantic High Intensity Drug Trafficking Area, Philadelphia Police Department and Pennsylvania State Police all played a part in the investigation.
Earlier this month, PokerStars founder Isai Scheinberg was fined $30,000 after pleading guilty to running an illegal internet gaming business in the US. PokerStars was forced to exit the US following a 2011 indictment but has gone on to reenter the US following receipt of a New Jersey license following a $4.9bn acquisition by Amaya, later becoming the Stars Group, in June 2014.