Wagering firm distances itself from colorful founder and Costa Rica
Embattled online gambling firm BETonSPORTS dealt its incarcerated chief executive out of the game with a terse announcement Tuesday that David Carruthers has been terminated.
The company also put some distance between its operations and BETonSPORTS founder Gary Stephen Kaplan, who was charged with 20 felony violations and is currently on the lam.
Mr. Carruthers, who was arrested in a U.S. dragnet nine days ago as he changed planes in Dallas on his way from the United Kingdom to Costa Rica, had his contract canceled.
"As a consequence, the board has removed him as a director," the BETonSPORTS statement said. "This action was taken as a consequence of Mr. Carruthers' continued detention by U.S. authorities."
The company, which shut down its operations after seven of its executives were indicted and Mr. Carruthers, 49, was arrested, said it is unable to function without its chief.
"Clearly, while he remains in the custody of the U.S. government he is unable to perform his duties," the company said. "Further the company has been unable to speak directly with Mr. Carruthers."
Founders Have No Role
The executives in control drew a hard line between its current operations and the original business on which the company that is listed on the London Stock Exchange is based.
"The board wish[es] to make absolutely clear that none of the founders of the original business has any continuing role within the company," a statement also issued on Tuesday said.
"The original founder has a consulting agreement with the company under which his role is non-management related, which was an absolute requirement of the board for the float and thereafter," the statement said.
Mr. Kaplan is generally viewed as a central target of U.S. law enforcement and is wanted for interstate transportation of gambling paraphernalia and tax evasion.
BETonSPORTS, which is based in London, also sought to distance itself from media reports of "improper activity" which took place at the company's Costa Rican location.
"All these allegations relate to the time prior to the acquisition of the business by the Company and its July 2004 float," the company statement said.
A number of stories in the British press have dug up old reports of a wild party in Costa Rica hosted by BETonSPORTS and about questionable affiliations.
"Most of that stuff is exaggerated," said Christopher Costigan, president of Gambling911.com, a gambling research and marketing site. "The party was classy and had quite a few celebrities. But the stuff written in the London press is greatly exaggerated."
Mr. Kaplan, 47, began his gambling operations in New York in the 1990s and was arrested on gambling charges by that state in 1993, U.S. court papers said.
He later moved his operations to Florida and subsequently to San Jose, Costa Rica.
Follow the Money
Mr. Kaplan is being charged with failure to pay taxes on about $3.3 billion in betting receipts generated in the United States.
The U.S. government is seeking a total of $4.5 billion from Mr. Kaplan, Mr. Carruthers, and five co-defendants associated with BETonSPORTS.
Mr. Costigan said he can confirm the rumors that Mr. Carruthers and Mr. Kaplan shared anything but a warm, collegial relationship.
"A lot of the bad blood had to do with Gary having to give up some control of the company," said Mr. Costigan. "Gary was very hands-on and he resented Carruthers being away for extended periods of time."
But despite the hostility, Mr. Carruthers is credited with helping to take the company public in spite of Mr. Kaplan's checkered past, Mr. Costigan said.
"Gary could not take the company public," said Mr. Costigan. "The company was unsuccessful at going public the first time, and I was very surprised when they succeeded the second time."