By: Alex Praschma
If you have ever seen Mean Streets, the Godfather, or any “old Italian gangster” movie, you are probably familiar with the forms of criminal activities prominent “mob” families typically engaged in. Homicide, money laundering, racketeering, extortion, bootlegging, and even drug trafficking were often the premiere avenues for funding their criminal enterprises. However, as time and innovation has progressed, surviving notorious crime families have “gotten with the times” and utilized today’s new age technology to exploit their illegal ventures.
In July of 2015, Joseph Graziano was sentenced to 18 months in prison in Newark Federal Court for his involvement in the Costa Rica based, illegal online sports betting site, “Beteagle.com.” Graziano was the principle website owner and worked along with Dominick Barone to carry out the daily activities of the website, conspiring with the Genovese Crime Family of La Cosa Nostra. These two worked with Joseph Lascala, an alleged “capo” and member of the Genovese family, who ran the operation in Northern New Jersey.
In furtherance of the conspiracy, members of the gang were considered “agents” and had access to the betting site. Prior to the new age of online betting, these agents held a position closely comparable to those commonly nicknamed “bookies.” These agents utilized their access to the betting site to track “sub agents” working beneath them in the hierarchy as well as the bets placed by those they attracted.
The process of placing the bets on Beteagle.com began by the agent or sub-agent rendering a username and password to prospective bettors. However, this access did not incorporate any online payments or credits so that the transactions could not be traced through Internet activity. Ironically, the old-time gangsters did not let go of their traditional enforcement tactics as they paid out all winnings in person and found that their collection tactics were much more effective when conducted with a little bit of violence. In the event a bettor failed to pay off his debt-stricken account, the La Cosa Nostra family threatened them and even resorted to physical punishments.
Authorities stated that prior to busting the lucrative scheme, they obtained recordings where Graziano would boastfully brag about the significant revenue Betagle.com was generating. “If at the end of the year, I can make two million and I gotta give away, like four or five hundred, that’s a million and a half you know… my money.”
Along with Graziano’s sentencing, he was also required to pay a $16,000 fine and forfeit $1 million dollars to the U.S. government. As for his wingman, Barone, he is also facing 18 months in prison.
To no surprise, this case is not a rare breed. Through the illegal business of sport betting, this continues to be a one of our countries most frequent crimes as the activity is still outlawed in a majority of states. One month earlier, six members of the Lucchese family also faced racketeering charges for employing an international betting ring welcoming billion dollar bets. However, what makes this a slippery slope is the fact that other forms of “internet gambling” are legal such as fantasy leagues and Indian gaming sites. It seems as though the outlawing of businesses to run gambling websites and to solicit online bets only applies to particular organized crime entities, which tend to utilize “distasteful collection practices” and tax fraud. On the other hand, the F.B.I claims that even companies handling transactions for cyberspace bettors can face federal charges.
With the current “skill and chance” controversy alleging that skill-based sports betting sites like “Draft Kings” and “FanDuel”, are sports gambling sites in disguise, it truly makes you wonders how lawmakers will treat fantasy sports in coming years. Specifically, in the future, where will the legislature draw the line on who can conduct this business and who cannot?
Alex is a Staff Member on the Journal of High Technology Law. He is currently a 2L at Suffolk Law with a concentration in Intellectual Property and is a Law Clerk at Fragomen, Del Rey, Bernsen & Loewy, LLP. He holds a B.A. in Legal Studies from Ithaca College.
