On Nov. 2, two men appeared before US District Court for the first time about their alleged sports betting pyramid scheme. The duo from Las Vegas is facing federal charges after being accused of running a multimillion-dollar sports betting pyramid scheme.
The men took payments from less than $10,000 to more than $500,000 from customers to be placed into their “investment funds.” The “funds” were actually a pyramid scheme that received at least $29 million from September 2010 to August 2019.
Attorney Nicholas A. Trutanich of the District of Nevada and Special Agent in Charge Aaron C. Rouse of the FBI announced that the defendants defrauded more than 600 investors. John Frank Thomas III, 75, and Thomas Joseph Becker, 72, are each charged with one count of conspiracy to commit wire fraud and 13 counts of wire fraud. Over the years, Thomas has used multiple aliases.
According to a note from the US Attorney’s Office, Thomas also went by the names “John Frank,” “Johnathan West,” “John Frank Rodgers,” “John Marshall” and “John Edwards.”
The penalty for each count of conspiracy to commit wire fraud and wire fraud is 20 years in prison and a fine. The financial punishment is either $250,000 or twice the gross gain or gross loss from the offense.
The sports betting pyramid scheme
According to allegations in the indictment, Thomas and Becker set up the following fake sports investment funds:
- Sports Psychometrics
- Vegas Basketball Club
- Vegas Football Club
- Einstein Sports Advisory
- Quantum Sports Advisory
- Wellington Sports Club
- Welscorp, Inc.
The duo made false claims to investors that have actually been stereotypes of sports betting touts for many years. They said that the duo could use their sports betting skills to make winning wagers with the investors’ money.
For example, the sports investment gurus told investors that they have “special insights” to generate a profit and that their “ahead-of-the-curve strategies” would be able to generate an average profit of 140%-180% for every $100 wagered. In theory, their special skills would lead to unlimited winning, since every wager had a positive expected value.
The touts proclaimed that during the 2014 football season, they had an exceptionally high yield of 10.75% per betting day. Obviously, they didn’t have this skill, and the scheme ensued.
The scam in this is that Thomas and Becker weren’t using the money to bet on sports. The duo told investors that their investment accounts were growing in value due to successful sports wagering. In true pyramid scheme form, they didn’t bet on sports at all. They just shuffled money around.
Nevada stands up for integrity in sports betting
In terms of states offering sports betting, Nevada — the longstanding betting capital — may seem behind. Sometimes it’s easier to innovate when starting from scratch. While the Nevada sports betting metamorphosis may be slow, the state is still considered to have the highest principles in gaming.
“Nevada has earned a worldwide reputation as the gold standard in gaming integrity,” said US Attorney Trutanich. “Our office will continue working with our law enforcement partners and the gaming industry, including the FBI, to maintain Nevada’s reputation — which reflects the efforts of hardworking Nevadans across our state — by investigating and prosecuting violations of the law and by helping enhance compliance programs.”
“The men and women of the FBI work hard every day to identify and apprehend those responsible for taking advantage of trusting citizens who were swindled out of their investments,” said Special Agent in Charge Rouse.
Earlier this year, the Department of Justice turned out the lights on a different fraudulent sports betting scheme. In that case, Robert Gorodetsky pleaded guilty to defrauding a single person of $9.6 million.
The two men in this case are scheduled to go on trial on Jan. 2. Both men could face at least 20 years in prison as well as a $250,000 fine if convicted.