A trio of Californians and two financial services companies were charged in connection with a multi-million-dollar illegal gambling ring involving current and retired professional athletes, the U.S. Department of Justice said Thursday.
The three men — Wayne Nix of Newport Coast, Edon Kagasoff of Lake Forest, and Howard Miller of Gardena — were charged in connection with the ring, after admitting to authorities they took millions in bets that were facilitated by a Costa Rican gambling website.
Celebrity Financial LLC was charged with failing to maintain an effective money laundering prevention program. The company took in more than $18 million in checks from the gambling ring at its San Fernando Valley check cashing store, the DOJ release said.
Two other defendants — Kenneth Arsenian of Newport Beach and Joseph Castelao of Ranchos Palos Verdes — have pled guilty to a number of charges in connection with the illegal gambling ring, including operating an illegal sports gambling business, filing a false tax return, and money laundering.
There is no legal California sports betting, though the state does have casinos and card rooms.
The state could have at least two sports betting initiatives on the November ballot. But even with voter approval, live sports betting in California could be as much as three years away.
What the Illegal Betting Ring Entailed
The department said one of the ring’s leaders admitted he failed to report just shy of $1.5 million in income from the gambling operation over two years.
The online gambling owners have already pleaded guilty and admitted the operation was illegal under the state’s laws because it included more than five people, operated for at least six years and frequently had gross revenues in excess of $2,000 per day, the department’s press release said.
In total, Nix (who is a former minor league baseball player) was charged with one count of conspiring to operate an illegal sports gambling business and filing an illegal tax return. Kagasoff was charged with one count of conspiring to operate an illegal sports betting business. Miller was charged with one count of aiding and abetting an illegal sports betting business.
Nix launched a bookmaking business two decades ago through his contacts from his playing days, the department said, cultivating a clientele of current and former professional athletes.
From there, Nix brought on Kagasoff in 2014, using Sand Island Sports’ calling centers to create sports betting accounts for users, while using associates to pay out winning bets and retaining nearly all the money collected from bettors, the department said.
Heavy Punishment for Ring Operators
As part of Nix’s plea deal, the former ballplayer admitted to receiving payments on gambling losses from a professional football player, an MLB coach, and a baseball analyst. The plea deal says Nix’s group took a $5 million bet on the 2019 Super Bowl. He also admitted to receiving more than $1.4 million in income he failed to report on his 2017 and 2018 tax returns while agreeing to pay more than $1.2 million in back taxes owed from those years, the report said.
As part of his plea deal, Nix also agreed to forfeit close to $1.3 million from bank accounts and brokerage accounts seized in February 2020 to the government.
In Arsenian’s plea deal, he admitted to failing to report more than $2.8 million in income between 2015 and 2018. As part of the deal, he agreed to pay back $1.1 million in back taxes and forfeit more than $340,000 in currency seized from his house in February 2020, the department said.
As part of their agreement, Sherman Oaks Check Cashing admitted to encouraging customers to bring in business checks in excess of the $10,000 reporting level, and as a result of that failure, two customers of the gambling ring cashed at least $18.35 million in checks, the department said.
The check cashing company also admitted to authorities that they made at least $500,000 in profits from the ring and agreed to pay a $500,000 fine, the maximum penalty under the law.