5Dimes and the U.S. Department of Justice reached a $46.8 million settlement of an investigation into illegal US sports betting operations, as well as money laundering and wire fraud.
5Dimes, a leading online gaming brand, entered into a settlement agreement with the U.S. Attorney for the Eastern District of Pennsylvania (EDPA) that should make the Company eligible to apply to enter the legal, regulated U.S. gaming industry under a new corporate structure, free and clear of any restrictions on the use or transfer of its assets and in full compliance with U.S. law. A new corporate entity, 5D Americas LLC, has already been incorporated in the State of Delaware.
5Dimes Reaches Settlement with U.S. Prosecutors
5Dimes formally operated for many years under the full and exclusive control of its founder, William Sean “Tony” Creighton. Prior to his tragic kidnapping and murder in 2018, both 5Dimes and Mr. Creighton were under federal investigation by the U.S. Department of Justice (DOJ), specifically the EDPA. After Mr. Creighton’s death, Laura Varela, the widow of the late Mr. Creighton, assumed responsibility for the 5Dimes assets, although she did not exercise day-to-day authority over the operations.
In the spring of 2019, Ms. Varela voluntarily contacted the EDPA to resolve any prior criminal activity by 5Dimes. This settlement agreement is a direct result of Ms. Varela’s extraordinary cooperation with the EDPA to resolve the criminal investigation and clear the Company. As part of the settlement, Ms. Varela identified criminal assets associated with the Company and agreed to forfeit more than $46 million in value to the government. The cooperation did not include disclosing information or identities of any customers.
As noted in the settlement agreement, the government’s lengthy investigation confirmed that Ms. Varela was not involved in any illegal actions of 5Dimes. The agreement expressly clarifies there are no legal restrictions on Ms. Varela’s use of her assets or the assets of the 5Dimes brand to explore future options, including, but not limited to, re-constituting the 5Dimes brand to be licensed to conduct legal, regulated gaming activities in the U.S. and internationally.
“It has been a very difficult two years for me and my family,” said Ms. Varela. “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.”
Ms. Varela added, “Along with a team of trusted advisors, I am exploring how we might relaunch as a legal sportsbook and casino in the legal, regulated U.S. market to continue serving our many loyal customers.”
“Laura is an inspiring, strong person, and we’re excited that she is one step closer to participating in the regulated U.S. sports-betting market. It has been a privilege to represent her,” said Stephen A. Miller of Cozen O’Connor, one of Ms. Varela’s attorneys.
Mr. Miller added, “Consumer interest in sports betting is enormous and only growing, but most of that interest has translated to bets placed with offshore operators rather than with operators in the legal and regulated market. As a result, state governments are missing out on a substantial amount of tax revenue. Laura presents U.S. regulators with a tremendous opportunity – she is the new owner of a tremendously respected brand that voluntarily settled its exposure with U.S. prosecutors and became compliant with U.S. law so that it could serve customers in appropriate jurisdictions. If the regulators refuse to license an innocent owner like Laura, then no other offshore sportsbook will even bother to try to clean up its act and follow her lead.”
The Agreement required 5Dimes to stop servicing U.S. customers by September 30, 2020. To satisfy that demand, 5Dimes stopped taking bets from U.S. customers as of September 21, 2020, until it is reconstituted as a new, legal and licensed entity in the U.S. 5Dimes notified its players to suspend their accounts and transfer their balances by September 25, 2020. Any customers who did not request a withdrawal of their funds by September 25, 2020 will have those funds transferred to Epiq, a third-party claims administrator, who will seek to deliver the funds to the account holder. In compliance with the agreement, any customer funds that are not claimed by September 30, 2021, will be forfeited to the U.S. government.
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