• About Us / Contact
  • Responsible Gambling
This site contains commercial content
SportsHandle
  • US Sports Betting
    • Arizona
    • Arkansas
    • Colorado
    • Connecticut
    • Delaware
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Tennessee
    • Virginia
    • West Virginia
    • Wyoming
  • Pending States
    • California
    • Florida
    • Georgia
    • Missouri
    • North Carolina
  • Canada
    • Ontario
    • British Columbia
    • Alberta
  • Sportsbook Apps
    • FanDuel
    • BetMGM
    • Caesars
    • PointsBet
    • BetRivers
  • Tools
    • Sportsbook Bonuses Explained
    • Sports Betting Revenue Tracker
    • Sports Betting Podcasts
    • Partnership Tracker
    • Expected Value
    • Sports Scores And Odds Apps
    • Sports Betting Twitter
  • News
No Result
View All Result
SportsHandle
  • US Sports Betting
    • Arizona
    • Arkansas
    • Colorado
    • Connecticut
    • Delaware
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Tennessee
    • Virginia
    • West Virginia
    • Wyoming
  • Pending States
    • California
    • Florida
    • Georgia
    • Missouri
    • North Carolina
  • Canada
    • Ontario
    • British Columbia
    • Alberta
  • Sportsbook Apps
    • FanDuel
    • BetMGM
    • Caesars
    • PointsBet
    • BetRivers
  • Tools
    • Sportsbook Bonuses Explained
    • Sports Betting Revenue Tracker
    • Sports Betting Podcasts
    • Partnership Tracker
    • Expected Value
    • Sports Scores And Odds Apps
    • Sports Betting Twitter
  • News
No Result
View All Result
SportsHandle
No Result
View All Result

SEC Levies Charges Against Fraudulent Sports Betting Schemer Promising 14% Return

In 2016, defendants Bettor Investments and Matthew C. Stuart raised a total of approximately $145,500 from about 70 investors in more than 20 states

Brett Smiley by Brett Smiley
July 31, 2019
in Regulation
(Shutterstock)

(Shutterstock)

Share on FacebookShare on Twitter

The U.S. Securities and Exchange Commission on Monday filed multiple fraud charges and SEC violations against an entity organized pursuant to a 2015 Nevada law that allows “entity wagering” funds akin to mutual funds, only the monies are wagered at licensed Nevada sportsbooks.

As the SEC described in its complaint against defendants Bettor Investments, LLC and Matthew C. Stuart, Nevada Senate Bill 443 “allowed entities to solicit and collect funds from investors anywhere in the world, aggregate those funds in a Nevada bank, place wagers on sporting events, and apportion profits and losses among investors.”

The now-defunct fund allegedly went belly up pretty quickly after its formation as defendants raised — and then lost or misappropriated —Β  approximately $145,500 from about 70 investors in more than 20 states. Defendants raised those funds between March and November of 2016.

Promissory notes, ludicrous sports betting promises

Stuart is identified as 47-year-old resident of Post Falls, Idaho, where he was (and perhaps still is) employed as a dealer at a casino. He was also the entity’s managing member and sole employee.

The SEC alleges that Stuart lied to investors about a variety of things, including losses, how much of the fund remained after those losses, as well as Stuart’s compensation in connection with running the fund (i.e. losing everyone’s money). Stuart allegedly had advised investors that it would make wagers across a variety of sports and rake in 15 perent of profits.

According to the complaint, things began to go south in November 2016 after defendants lost about $42,000; at that time, Stuart reported to investors that the fund was up about .08 percent. The complaint does not identify which sportsbook(s) took defendants’ wagers. CDC Gaming Reports previously identified CG Technology as the only operator to accept bets from entity funds. (CG Technology has faced other problems in the past.)

Around this time, per the complaint, “the Defendants began to operate outside the parameters of NVSB 443, by offering investors the opportunity to convert their previous investments with Bettor into promissory notes with Stuart.”

Stuart then refunded 15 investors about $70,000 and issued the rest 12-month promissory notes in which Stuart “guaranteed” rates of return on the order of 14%. He also lied about his compensation. It total, he promised 51 investors what amounted to $136,800 in obligations at a time when he was holding a small fraction of that.

Here’s the nut of the complaint:

In other words, the Defendants’ material misrepresentations and omissions left investors unaware that their decisions regarding redemption or entering into promissory notes with Stuart was actually a choice between getting all of their money back plus a small profit (at least until Bettor’s bank account was depleted) or having to rely upon Stuart to generate the massive returns necessary to pay promissory note holders the 14% returns he had guaranteed in 12 months, given the limited funds available to him with which to wager.

Obviously,Β  Stuart was not able to deliver on this Bernie Madoff-like promise when the notes became due in early 2018.

Stuart now faces charges for unregistered offering of securities, for fraud under the Securities Act, and for fraud under the Exchange Act.

Not the first time entity wagering under scrutiny

In September 2018, the SEC settled a similar charge against two wagering entity funds established under NVSB 443, Contrarian Investments LLC and Nevada Sports Investment Group. Like Bettor Investments, Contrarian was charged for unregistered offering of securities. The SEC writes in a litigation release:

The Complaint charges Contrarian with conducting an unregistered offering of securities in violation of Sections 5(a) and 5(c) of the Securities Act of 1933. The Commission accepted Contrarian’s offer of settlement in which, without admitting or denying the Commission’s findings, it consented to the entry of a judgment ordering a permanent injunction against future violation of Sections 5(a) and 5(c) and requiring it to send a copy of the final judgment to each investor.

As CDC Gaming noted, neither of the above-referenced companies were fined by the SEC nor were they suspended from doing business.

Elsewhere, more recently, a former felon Ponzi schemer, identified by the Las Vegas Review-Journal as John F. Thomas III, has come under SEC scrutiny for running six funds with similarly outsized promises like Stuart’s.

Here’s what one of Thomas’s investors told the Review-Journal: “[Thomas] is very confident that he will be making millions by May and will be able to pay us all off entirely around that time. I told him that most of us still have faith in him that he would pay us but we can’t control everyone.”

Suckers are born at least often enough to keep the SEC busy with fraudulent entity wagering schemes.

Be careful, folks. There are no guarantees in sports betting, certainly not at the clip Stuart allegedly promised.

Share2TweetShare
Brett Smiley

Brett Smiley

Brett Smiley is editor-in-chief and co-founder of Sports Handle, which joined forces with the US Bets team in November 2018. He focuses on the sports betting industry and legislation. He's a recreational sports bettor and DFS player himself, focusing on the NFL. In a past life, Smiley practiced commercial litigation in New York City and previously wrote for FOX Sports and SI.com. He lives in New Jersey with his family.

Related Posts

draftkings logo mls
Features

Sports Betting Regulators Seek Proactive Response To Cyber Hacks At DraftKings

December 15, 2022
Shutterstock
Regulation

William Hill Fined $100K By Nevada For Tech Failings Related To Sports Wagering Platform

September 23, 2022
Load More

Top Stories

taylor mathis

Taylor Mathis Got Sacrificed At The Altar Of Responsible Gambling

March 20, 2023
fanduel baseball wall

Premade Same Game Parlays Are Sucker Bets

March 13, 2023
maginfier-over-small-print

Read The Fine Print: A Proposed Federal Rule Could Change Everything For Indian Gaming

March 6, 2023
roman reigns wwe

Colorado Denies Report Stating That It’s Considering WWE Wagering

March 8, 2023

State Sports Betting Guides

Ohio (U.S. state) flag waving against clear blue sky, close up, isolated with clipping path mask alpha channel transparency, perfect for film, news, composition

Ohio Sports Betting – Where To Play, Bonus Offers And Promo Codes

by Brian Pempus
March 23, 2023

Downtown Detroit at twilight (Shutterstock)

Michigan Sports Betting – Where To Play, Online Sportsbooks, And FAQ

by Brett Smiley
March 23, 2023

VA captial

Virginia Sports Betting – Where To Play, Online Sportsbooks And Bonus Offers

by Brett Smiley
January 17, 2023

nj flag

New Jersey Sports Betting — Where To Play, Online Sportsbooks, And FAQ

by Brett Smiley
March 22, 2023

pa online sportsbooks

Pennsylvania Sports Betting – Where To Play, Online Sportsbooks And Bonuses

by Brett Smiley
October 6, 2022

Canada Sports Betting Guides

Canada Sports Betting – Best Sportsbook Apps & Bonus Offers

British Columbia Sports Betting – Legal Update, Available Sportsbooks, and FAQ

Ontario Sports Betting – Legal Status And Where To Play

SportsHandle

  • Analysis
  • Casino
  • Features
  • Horse Racing
  • Industry
  • Legal
  • Legislation
  • Opinion
  • Podcasts
  • Poker
  • Politics
  • Promotions
  • Regulation
  • Sports
  • Uncategorized

Better Collective

This website is owned and operated by Better Collective USA. Trademarks and copyrights referenced on this website are and shall remain the exclusive property of their respective owners and/or licensors. Please be sure to visit the operator’s website(s) to review their terms & conditions. We advise you to read these carefully as they contain important information. Copyright Β© 2023 USBets.com | Better Collective USA
21 Play Responsibly
Gamble Aware West Virginia
Gambling Problem? Call 1-800-Gambler.
GameSense

Search Sports Handle

No Result
View All Result
  • About Us / Contact
  • Responsible Gambling

No Result
View All Result
  • US Sports Betting
    • Arizona
    • Arkansas
    • Colorado
    • Connecticut
    • Delaware
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Mississippi
    • New Jersey
    • New Mexico
    • New York
    • Ohio
    • Oregon
    • Pennsylvania
    • Tennessee
    • Virginia
    • West Virginia
    • Wyoming
  • Pending States
    • California
    • Florida
    • Georgia
    • Missouri
    • North Carolina
  • Canada
    • Ontario
    • British Columbia
    • Alberta
  • Sportsbook Apps
    • FanDuel
    • BetMGM
    • Caesars
    • PointsBet
    • BetRivers
  • Tools
    • Sportsbook Bonuses Explained
    • Sports Betting Revenue Tracker
    • Sports Betting Podcasts
    • Partnership Tracker
    • Expected Value
    • Sports Scores And Odds Apps
    • Sports Betting Twitter
  • News

loading

Please wait while you are redirected to the right page...