(Adds comment from CG Technology, background on Nevada
By Nate Raymond
NEW YORK Oct 3 An affiliate of financial
services firm Cantor Fitzgerald has agreed to pay $22.5 million
to resolve investigations into its past involvement with illegal
gambling and money laundering schemes, U.S. authorities said on
Federal prosecutors in Brooklyn said CG Technology LP had
agreed to pay $16.5 million and enter into a non-prosecution
agreement, three years after a former executive pleaded guilty
to conspiring to participate in an illegal gambling business.
The U.S. Treasury Department's Financial Crimes Enforcement
Network separately announced a $12 million civil penalty against
CG Technology, $6 million of which will be covered by the
company's criminal settlement.
CG Technology declined to comment.
Prosecutors said that from 2009 to 2013, CG Technology, then
known as Cantor Gaming, aided and abetted operation of an
illegal gambling business and money laundering while growing
into one of the largest U.S. race and sports book operators.
"Unacceptably, this growth came at the expense of compliance
with the law, and as a result Cantor Gaming became a place where
at least two large-scale illegal bookmakers could launder their
ill-gotten proceeds," Brooklyn U.S. Attorney Robert Capers said.
Prosecutors said Cantor Gaming offered higher betting limits
than others in the area, seeking to attract and retain bettors
who would frequently place large wagers on sports events.
It also gave important bettors preferential treatment,
including direct access to Michael Colbert, the company's
director of risk management, prosecutors said.
To accommodate some bettors, Colbert and his staff
facilitated illegal conduct, including allowing the use of
"runners" to place bets for third-parties, prosecutors said.
Colbert and his staff also processed large cash deposits,
withdrawals and third-party wire transfers while knowing the
funds represented the illegal proceeds, prosecutors said.
Prosecutors said CG Technology admitted to violating federal
laws, is cooperating with authorities and has taken steps to
reform business and compliance operations.
Colbert pleaded guilty in August 2013 to conspiracy to
conduct an illegal gambling business. He faces up to five years
in prison when he is sentenced. A lawyer for Colbert did not
respond to a request for comment.
Cantor Gaming in 2014 agreed to pay $5.5 million to resolve
related allegations by the Nevada Gaming Control Board.
Chief Executive Officer Lee Amaitis resigned in August after
the company agreed to pay $1.5 million to resolve separate
claims by the Nevada regulator over problems with a computerized
system that resulted in patrons being incorrectly paid.
(Reporting by Nate Raymond in New York; Editing by Chris Reese
and David Gregorio)