Double Down

Never one to bet on football games or squander time and money at the track, Gary Kaplan was still one serious gambling man. In fewer than five years' time, the 48-year-old high school dropout from Brooklyn, New York, turned a pipe dream for an offshore sports book into a billion-dollar Internet empire: the Costa Rica-based BETonSPORTS.

Famous for its aggressive advertising and extravagant parties, the firm came to employ more than 2,000 people, occupying nine floors in a San José office tower. Bettors, mostly American, wagered on everything from pro basketball to university cricket, as well as offbeat "proposition bets" including, "What date will the war in Iraq begin?" and, "Who will first be arrested for wife-beating: Bobby Brown, Jean-Claude Van Damme or Dennis Rodman?"

"I'm a believer in Rodman all the way, so the odds on him were short," Kaplan told the Miami Herald during a rare interview in 2000. "Bobby Brown, you think maybe Whitney [Houston] will keep him in check a little bit, so we put him down at the bottom."

In 2004 Kaplan's company went public on the London Stock Exchange, raising $44 million in capital and netting proceeds and stock worth hundreds of millions of dollars — not bad for the eldest son of a working-class New York garment salesman. All the while, Kaplan was betting that the U.S. Department of Justice would leave offshore Internet bookmakers alone, saying that they'd long operated under murky legal conditions.

For years U.S. lawmakers have tried to ban the $12 billion online gambling industry, which can include sports, poker and casino-style betting, and is legal in more than 80 countries. The Justice Department considers the business to be in violation of the 1961 Wire Act, which prohibits the use of a wire communication facility" to transmit bets across state or foreign borders.

Some attorneys argue, however, that the law is antiquated and applies neither to Internet gambling nor its offshore purveyors; Gary Kaplan rolled those dice for years. But it all came up snake eyes on July 17, 2006, when the U.S. Attorney's office in the Eastern District of Missouri unsealed a 22-count indictment charging him with racketeering, wire fraud, tax evasion and other crimes. Federal authorities proceeded to arrest eight of his alleged co-conspirators, among them, BETonSPORTS' Scottish CEO and two of Kaplan's siblings. The government also set about seizing more than $4.5 billion in assets — including cash, Hummers and luxury RVs — associated with Kaplan's gambling empire.

The economic fallout was disastrous: Just one day after the indictment, investors in other public gaming companies watched their share value plummet. BOS shut down its operations, fired its CEO and left customers in the lurch for millions of dollars. Privately owned gambling firms hastily fled one offshore location for another.

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Gary Kaplan, facing 83 years in a federal prison, proceeded to travel the world in pursuit of new business ventures, even sealing a deal for a new online wagering game he called Mr. BidLow. According to court papers, he moved by air and by sea between Israel, Venezuela, Argentina, Colombia, Peru and Uruguay. Authorities do not believe he set foot in Costa Rica, where his wife, Holly Kaplan, and two young children resided under the watch of the family's personal bodyguards.

On March 27, nine months after the indictment was issued, the stocky, chestnut-haired fugitive entered the Dominican Republic and, according to court documents, checked into a hotel under the name Allan Andre Viaux. People close to Kaplan say he intended to join his family at a vacation home and enjoy one last Easter holiday together before turning himself in. But Interpol, watching his every move, arrested him the next day.

Court filings show Kaplan was carrying $11,000 in various currencies, two fake Peruvian passports, an Israeli passport issued to Meir (Gary Stephen) Kaplan and a Dominican passport in the name of Gary Stephen Kaplan Pearlman. Kaplan's attorneys explained that Kaplan had long thought of relocating to Israel by virtue of his Jewish birthright, but offered no explanation for the phony Peruvian documents.

Officials also confiscated steroids — purportedly to assist Kaplan in bodybuilding — and a spiral-bound notebook with a handwritten to-do list, entitled "Nicaragua: Requests." Kaplan's notes read:

(1) citizenship

(2) passport

(3) possible diplomatic (no questions)

(4) citizenship & Passports for my family

(5) asylum (written Protection from USA legal documentation all 22 counts charges).

(6) landing right for helicopter. Specify location other than Major airport. (I'll pay for govt. agent to supervise) (custom agent stamp in stamp out...)

The last item to catch authorities' attention upon Kaplan's arrest was a handcuff key found in his backpack. The government contended he was previously detained in Venezuela and bribed police, receiving the key as a parting gift. Prosecutors considered it a sign that Kaplan would stop at nothing to elude law enforcement. Kaplan's attorneys, on the other hand, claimed he was kidnapped after vacationing in Venezuela with his family and that the key was a memento from the "intermediary" who secured his freedom.

Interpol swiftly transferred Kaplan from the Dominican Republic into U.S. custody at a Puerto Rico jail, where he remained for more than a month before arriving in St. Louis this past May. The government asked U.S. Magistrate Judge Mary Ann Medler to keep him locked up until trial.

On May 25, during Kaplan's first detention hearing, his father-in-law, a rubber-products magnate, took the stand and offered to put up his two vacation homes in Colorado and Florida, a combined value of $7 million, as collateral for Kaplan's bond. "I have total faith and confidence in my son-in-law," said Warren Hoeffner, of Tyler, Texas. "I don't think he would do anything to hurt his family, his children or me."

But Assistant U.S. Attorney Mike Fagan, a career federal prosecutor who pursued BETonSPORTS for more than four years, tried to discredit Hoeffner by claiming he loaned Kaplan seed money for BOS' early advertising campaigns. A devout Methodist who doesn't believe in gambling, Hoeffner clarified that he refused to help Kaplan — but that his wife (who enjoys gambling) had made several loans to their son-in-law.

In a subsequent court order on June 13, Judge Medler made note of Kaplan's criminal past, including convictions for cocaine possession, credit card forgery and promoting gambling in the second degree, all which Kaplan accumulated before starting up BOS. Judge Medler also noted that Kaplan owned six guns, six cars and two expensive homes in Costa Rica, and that Kaplan and his wife had numerous bank accounts, with at least $100 million at their disposal.

"On his flight from the Dominican Republic to Puerto Rico after his arrest," wrote Judge Medler, "defendant made an unsolicited statement to the FBI agents to the effect that the longer he stayed on the run from American law enforcement authorities the more he thought he could outlast the Indictment." Medler ruled to keep Kaplan behind bars at the St. Louis County Justice Center.

Kaplan's team of ten attorneys pleaded for a second hearing. His legal brain trust included famed Harvard Law professor Alan Dershowitz and two noted Texans: Chris Flood and Dick DeGuerin. DeGuerin's best known for defending cult leader David Koresh and the disgraced former congressman Tom DeLay. U.S. District Judge Carol Jackson granted the request.

And so on September 5 Kaplan was back in court asking Jackson to place him on house arrest at his sprawling Portland Place mansion in the Central West End, which Holly Kaplan purchased for $1.5 million this summer. The brandy-haired Holly, an aspiring model when she met her husband in New York City sixteen years ago, watched the proceedings anxiously, clutching a smooth "good luck" stone, a present from her eleven-year-old son.

Judge Jackson had some unusual odds to consider: What would Gary Kaplan's prominent neighbors think of his wish to place armed security guards outside his home on the private street? And, if Kaplan himself was footing the bill, wouldn't it be easier for him to flee?

DeGuerin tried to assure Jackson that off-duty cops would turn Kaplan's home into "a virtual jail," replete with motion detectors, infrared monitoring and 24-hour physical surveillance. Visitors would be searched, and the Kaplan family — frequent world travelers — would surrender their passports.

But Fagan, the prosecutor, picked apart that scheme, arguing that it would be impossible to keep Kaplan from walking, driving or even flying away. "He does own a helicopter, by the way," he pointed out.

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Gary Kaplan was 34 years old, newly married with two kids and was somewhat aimless in 1993, when he moved his family from New York to South Florida. He had tried out his father's trade and even dabbled in fashion design, but with little success. Kaplan wasn't in Florida long, however, before he heard about sports bookies traveling to the Caribbean to take bets from U.S. customers.