Offshore sportsbook 5Dimes, which shut down U.S. operations earlier this month, has reached a $46.8 million settlement with the U.S. Department of Justice, according to a release Wednesday from the U.S. Attorney’s Office in the Eastern District of Pennsylvania (EDPA). Under the terms of the agreement, 5Dimes and owner Laura Varela will not be prosecuted criminally or civilly for any crimes committed before Sept. 30, 2020. The deal excepts any potential tax crimes, according to the release. According to a 5Dimes press release, the company has already incorporated as 5D Americas LLC in Delaware.
5Dimes, originally a Costa Rican-based offshore sportsbook, announced in early September that it would be closing down U.S. player accounts as of Sept. 21 and would have an announcement on Sept. 30 about next steps. The settlement theoretically could clear the way for 5Dimes to regroup and enter the legal U.S. sports betting market, as the company hinted earlier.
“This settlement would mark the first step in what is likely a very long road to rehabilitating the brand to the point where it could possibly become licensed by a U.S. regulator,” said John Holden, an assistant professor at Oklahoma State University who focuses on the gambling industry.
Such a rehabilitation would likely result in the removal of any individuals who were involved with day-to-day operations of the company while it was operating illegally.
Creighton ‘hid his control’ of 5Dimes
“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,” said U.S. Attorney William M. McSwain via press release. “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.”
The DOJ first opened an inquiry into 5Dimes in mid-2016, when it partnered with the Department of Homeland Security to “investigate violations of federal criminal laws including, but not limited to, illegal gambling, money laundering, wire fraud, and other related offenses.”
The company was founded in 2011 by U.S. citizen Sean “Tony” Creighton, who was subsequently kidnapped and murdered in Costa Rica. According to the release, Creighton illegally founded and ran the company and “hid his control over the company by utilizing an alias and operating the business through several shell companies.”
Online sportsbook 5Dimes has agreed to $46.8 million settlement with US authorities, plans to enter American betting market. Story to follow.
— David Payne Purdum (@DavidPurdum) September 30, 2020
His widow, Varela, is a Costa Rican citizen, and according to the DOJ was not involved in the day-to-day operation of 5Dimes, either before or during Creighton’s lifetime. The DOJ explicitly wrote in the brief that Varela “sought to resolve the federal investigation and change the operations of the company in a manner that complies with U.S. law.”
According to 5Dimes, Varela approached the the EDPA in the spring of 2019 in an effort to settle with U.S. authorities. The agreement, according to 5Dimes, is “a direct result of Ms. Varela’s extraordinary cooperation with the EDPA to resolve the criminal investigation and clear the Company.” Among the terms of the agreement, 5Dimes does not have to disclose any information about its customers.
“It has been a very difficult two years for me and my family,” said Varela via press release. “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 U.S. 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.”
Money laundered through precious metals, sports cards
Among the assets that the DOJ and Homeland Security seized during the investigation are several valuable sports trading cards and a rare coin collection. Creighton owned a 1948 George Mikan rookie basketball card, which he purchased for $400,000, as well as a 1970 Pete Maravich rookie basketball card. The Mikan card was the priciest in history when Creighton bought it, and according to the release is now on display at the Smithsonian Institute.
The DOJ determined that Creighton used third-party payment processors (TPPPs) to take payments from U.S. bettors, which is illegal. The TPPPs charged U.S. customers for 5Dimes and then took the proceeds and sent them to shell companies set up by Creighton. He also laundered money through physical investments in precious metals and sports trading cards.
The U.S. Treasury Department maintains a fund for DOJ asset forfeitures. The U.S. Attorney General can also dispose of forfeited assets pursuant to 28 U.S. Code § 524(c).
“This appears to mark the end for one of the more prominent offshore books, and adds clarity to a somewhat vague message released by the book several weeks ago,” Holden said. “One thing that remains to be seen is the impact this might have on other offshore books.”