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The following stories are reprints of internet news articles. If you would like to follow the case from its early days begin your reading from the bottom.
Bookmaker Loses Federal Appeal in Internet Sports Betting Case
August 1, 2001, By BENJAMIN WEISER, NY Times
A United States appeals court panel in Manhattan yesterday upheld the conviction of a bookmaker who was sentenced to 21 months in prison as part of what the authorities called the first federal prosecution of Internet sports gambling.
The case involved a lucrative Internet sports betting business run by the man, Jay Cohen, from the island of Antigua, in the Caribbean. By November 1998, the venture, World Sports Exchange, had received 60,000 phone calls from customers in the United States, including more than 6,100 from New York, the panel said in its opinion.
Federal prosecutors in Manhattan had charged that Mr. Cohen's enterprise violated a federal law that banned the use of interstate wires for betting.
According to the opinion, customers opened accounts with the company, wired at least $300 to the accounts, and then used the Internet or telephone to authorize the company to place bets for them.
The company took a 10 percent commission for each bet, the opinion said.
In its opinion, a three-judge panel of the United States Court of Appeals for the Second Circuit rejected Mr. Cohen's contentions that the law was unclear and ambiguous, and that his customers were not actually placing bets over the phone lines in violation of the law.
According to the opinion, Mr. Cohen contended that his customers were only conveying information that enabled his company "itself to place bets entirely from customer accounts located in Antigua."
But the panel, ruling unanimously, said the government had proved at trial last year that World Sports Exchange's customers were placing bets.
Mr. Cohen's lawyer, Mark M. Baker, said his client had modeled his business after New York's Off-Track Betting Corporation.
"He took every step imaginable to determine the legality of his action," Mr. Baker said, "and the court has found that all that is irrelevant."
Mr. Baker said that no decision had been made concerning an appeal for Mr. Cohen, who has been free on bail and now lives in California.
In addition to his sentence, Mr. Cohen was also fined $5,000. Prosecutors had no comment yesterday.
The opinion was written by District Court Judge John F. Keenan, who sat by special designation on the appeals panel. The panel also included Judges Pierre N. Leval and Fred I. Parker.
Internet Gambling Conviction Upheld
August 1, 2001
NEW YORK (AP) - A federal appeals court has upheld the conviction of a San Francisco man who operated a sports betting business on the Internet, concluding that the business engaged in illegal gambling.
Lawyers for Jay Cohen, 34, formerly of Woodmere, N.Y., contended that Cohen did not break the law because his business was based in Antigua, where betting is legal. They also argued that New York, where many of the customers lived, allows certain types of wagering, such as off-track betting.
But the 2nd U.S. Circuit Court of Appeals rejected the arguments, saying betting was clearly illegal in New York.
Cohen was sentenced a year ago to one year and nine months in prison. The conviction came in the first use of the U.S. Wire Wager Act to shut down an Internet gambling operation, prosecutors said at the time.
Mark M. Baker, a lawyer for Cohen, said he was disappointed by the ruling and would appeal.
``There are about 800 web sites out there right now doing exactly the same thing as the World Sports Exchange and it doesn't look like any of them are being criminally prosecuted,'' Baker said.
Marvin Smilon, a spokesman for U.S. Attorney Mary Jo White, said prosecutors had no comment.
Man Jailed in 1st U.S. Online Gambling Conviction
By Gail Appleson, Law Correspondent, Reuters
Thursday August 10
NEW YORK (Reuters) - The first person to be convicted on federal charges of running an illegal offshore Internet sports gambling operation was sentenced to nearly two years in prison.
Jay Cohen, co-owner of World Sports Exchange, based on the Caribbean island of Antigua, was sentenced to 21 months in prison and fined $5,000 by U.S. District Judge Thomas Griesa.
A Manhattan federal jury in February found Cohen guilty of operating a sports betting business that illegally accepted bets and wagers on sporting events from Americans over the Internet and telephones.
Cohen, originally from Long Island, New York, lives in San Francisco.
He was the first defendant to stand trial in a series of Internet offshore sports gambling cases brought under the federal Wire Wager Act.
Under that law, it is illegal to use telephone lines in interstate or foreign commerce to place sports bets. The act also outlaws the transmission of information that helps gamblers bet on sporting events and contests.
Manhattan U.S. Attorney Mary Jo White said the case showed that sportsbook operators who take bets from Americans could not avoid the federal wager law by taking their business overseas.
``An Internet communication is no different than a telephone call for purpose of liability under the Wire Wager Act,'' she said. ``As this case demonstrates, persons convicted of operating Internet sportsbooks offshore face very serious consequences -- imprisonment and thousands of dollars in fines.''
Prosecutors alleged Cohen and other defendants tried to skirt U.S. law by running their operations from jurisdictions that allow gambling, such as Curacao, Panama, the Dominican Republic, Antigua and Costa Rica.
According to evidence presented at the two-week trial, Cohen's company solicited Americans through the Internet site www.sex.com and through a toll-free telephone number.
Prosecutors said Cohen's business also advertised in U.S. newspapers and magazines. The ads said U.S. customers could open a betting account with the company, wire money to fund the account and then bet on U.S. sporting events and contests.
Prosecutors said undercover FBI agents accessed the Internet sites and found information about betting on professional and college sporting events such as basketball, hockey, baseball and football.
The undercover agents then opened accounts by transferring money via Western Union. They placed wagers on the games from computers and telephones in New York.
Cohen and 21 other defendants were indicted in 1998 for their alleged involvement in offshore sports betting operations. Ten of the defendants previously pleaded guilty to conspiring to break the wager law.
Three have pleaded guilty to related misdemeanor counts and seven remain fugitives, including Steve Schillinger, vice president and director of wagering for World Sports Exchange.
Schillinger told Reuters late last year that the company does not believe that what it is doing is illegal and that the federal government does not have jurisdiction over the offshore business.
He said the operation took annual bets of between $100 million and $200 million.
Letters for Jay Cohen
This came to us from Robert Blumenfeld, a concerned gambler and friend of Jay Cohen's.
I am writing to ask you to consider writing a letter on behalf of Jay Cohen to the judge who will be sentencing him in late May.
As you may have heard or read about, in early March 2000, Jay Cohen was convicted by a jury on several counts of wire fraud in federal district court in New York. The case stemmed from Jay's involvement as president and founder of the World Sports Exchange, a very successful, honorable and visible online sports book based in Antigua. The facts of the case were not in material dispute at trial. Jay never denied that he was the founder and leader of the WSE. His position was at trial and remains today that the WSE's business is completely legal because it is based in Antigua. Jay and his defense team have also taken the position that WSE's operations are based in Antigua and are outside the jurisdiction of applicable U.S. law.
Jay is set to be sentenced in late May. The press has written articles stating that Jay could be sentenced to prison for up to 19 years and fined a significant amount. This is true. However, it is my understanding that the federal sentencing guidelines for Jay's conviction recommends that the judge sentence him to prison for 18 months, and that is the most likely sentence in the case. Jay can also be fined. The judge who will be sentencing Jay has discretion in deciding on any sentence. For instance, the judge could recommend a "downward departure" that would allow Jay to serve no prison time at all. The Judge could also impose a fine and no prison time. That is why I am writing.
Jay's attorney, Ben Brafman, has asked friends, family, supporters and well-wishers to write letters asking the Judge for compassion and leniency in sentencing Jay. If you know Jay or anything about his case, or believe in his integrity and honesty, I urge you to write a letter on Jay's behalf. Please send them as soon as possible, because the sentencing date is only four weeks away.
Here are Jay's lawyer's instructions on how to write such a letter:
1. IMPORTANT: Mail the letter to Jay's lawyer, Ben Brafman, at the following address:
Brafman & Ross, P.C., 767 Third Ave., 26th Floor, NY, NY 10017. Mr. Brafman will assemble the letters and present them to the Judge.
2. IMPORTANT: Even though you are sending the letters to Mr. Brafman, you should address the letter as follows:
Honorable Thomas P. Griesa, United States District Judge, Southern District of New York, United States District Courthouse, 500 Pearl Street, NY, NY 10007.
3. Begin your letter "Dear Judge Griesa" or "Your Honor", introduce yourself, including a little about you and what you do for a living. You and type or handwrite the letter, but only write on one side of the page.
4. Explain how you know Jay, how long you've known him and under what circumstances you have known him.
5. Describe why you have a high opinion of Jay, how you personally know his good qualities. Feel free to state that you are aware he has been convicted but that does not change your high opinion of him.
6. Please keep the tone of your letter respectful and courteous, and avoid the urge to criticize the flawed judicial system or Jay's clear innocence. The tone should be a plea for leniency and compassion. The tone of the letter should not be an argument to the Judge about how offshore gambling is legal or ok, because the Judge has clearly rejected that concept. You may know the Judge is wrong, but this letter is not the time to argue about that.
If you have any questions about this process, please contact me at firstname.lastname@example.org or, contact Melinda Sarafa at Ben Brafman's office, 212.750.7800.
Thank you for your consideration.
IGC Says US Justice Department, Judge Stacked Deck Against Entrepreneur Jay Cohen Resulting in Unfair Conviction
reprinted from AnteUp. Click here for full sotry
03/02/00 VANCOUVER, CANADA (IGC & AnteUp) - Following a one-sided trial in which the defense was denied even minimum standards of fairness and due process, the United States Justice Department yesterday obtained a conviction of online entrepreneur Jay Cohen in U.S. district court for violating the 1961 Wire Act.
Sue Schneider, the Chairman of the Interactive Gaming Council, stated: "We are disappointed that the Justice Department decided to pursue this case, even though Jay Cohen was operating a licensed and regulated gaming establishment and causing harm to no one. However, our disappointment is dwarfed by the Council's concern about the Orwellian tactics that the prosecutors used to obtain this conviction. Not only was Mr. Cohen precluded from offering a substantive defense, the judge in the case would not even let the jury have a complete or accurate copy of the Wire Act upon which to
base their decision. This type of 'convict now and find facts later' prosecution should be troubling for all members of the Internet community."
Schneider continued: "Cohen's defense was based upon a reasonable and literal reading of the criminal code, as well as the fact that he was licensed and supervised by gaming regulators in the sovereign nation of Antigua. However, Judge Griesa prevented any hint of such a defense from being presented to the jury. By putting Cohen in a legal straightjacket, the judge almost assured the prosecution of a conviction and denied him due process and other civil rights.. Nevertheless, even with such bias from the bench, it is clear that, the jury struggled with the fundamental question of Cohen's innocence, taking more than two full days to deliberate before reaching its conclusion."
During its deliberations, the jury asked for a copy of the Wire Act (18 U.S.C. sec. 1084) to determine whether Cohen's actions were indeed criminal. The judge sent to the jury a copy of the statute, but had the provision of section 1084, which contained a legal defense for Cohen, removed without any trace. Jurors were not even told that parts of the statute had been removed. Faced with an incomplete statute - one lacking the defenses approved by Congress - the jurors had no choice but to convict.
IGC Vice Chairman Albert Angel added: "This case should not be interpreted as a black mark on the interactive gaming industry as a whole. It is widely understood in the legal community that nearly four-decade old Wire Act does not apply to casino-style gaming conducted on the Internet."
While Cohen's conviction is extremely troubling, it is based on a law that applies strictly to sports wagering by telephone and in which there is no mention of the Internet at all. Had prosecutors attempted to indict licensed and regulated online casino operators (as opposed to Cohen and World Wide Sports Exchange), the outcome would have been far different.
"The IGC fully backs Mr. Cohen because we believe he is the victim of a biased prosecution and trial. We urge him to appeal this unfair outcome so that his case does not become a precedent for overzealous prosecutors in the future," said Angel.
U.S. Wins First Offshore Internet Gambling Case
Monday February 28
reprinted from Yahoo. Click here for full story.
NEW YORK (Reuters) - The U.S. government's efforts to stem illegal Internet betting activity outside of its borders got a boost on Monday when a federal jury for the first time convicted a man for running an offshore online sports gambling operation.
Jay Cohen, 33, a co-owner of World Sports Exchange based in Antigua, was convicted by a Manhattan federal jury for operating a sports betting business that illegally accepted bets and wagers on sporting events from Americans over the Internet and telephones.
He was the first of 22 defendants to stand trial in the government's initial prosecutions brought under the federal Wire Wager Act.
That law makes it a crime to use telephone lines in interstate or foreign commerce to place sports bets. It also outlaws the transmission of information that helps gamblers bet on sporting events and contests.
Prosecutors allege that the defendants have tried to skirt U.S. law by running their operations from jurisdictions that allow gambling, including Curacao, Panama, the Dominican Republic, Antigua and Costa Rica.
Cohen, who lives in San Francisco, faces a possible maximum prison term of five years on one count of conspiracy to violate the Wire Wager Act and two years on each of seven other related charges. He is scheduled to be sentenced on May 23 before U.S. District Judge Thomas Griesa.
According to evidence presented at the two-week trial, Cohen's company solicited Americans through an enticing Internet address www.sex.com and through a toll-free telephone number.
Prosecutors said Cohen's business also advertised in U.S. newspapers and magazines. The ads told U.S. customers they could open a betting account with the company, wire money to fund the account and then bet on American sporting events and contests.
Prosecutors said undercover FBI agents accessed the Internet sites and found information about betting on the outcomes of professional and college sporting events, such as basketball, hockey, baseball and football games.
The undercover agents then opened accounts by transferring money via Western Union. They placed wagers on the games from computers and telephones in New York.
Cohen and the other 21 defendants were indicted in 1998 for their involvement in offshore sports betting operations. Ten of the defendants previously pleaded guilty in the case and seven are still fugitives.
Among those who refuse to return to the United States is Cohen's colleague Steve Schillinger, vice president and director of wagering for World Sports Exchange.
Schillinger told Reuters late last year that the company does not believe that what it is doing is illegal and that the U.S. government does not have jurisdiction over World Sports Exchange because it is not based in the United States.
He said the operation takes annual bets of $100 million to $200 million.
Web gambling case could be far-reaching
By Chris Jenkins
reprinted from USA TODAY, click here for full story
Can a law passed when computers took up entire rooms keep an Antigua-based Web site from accepting bets from U.S. citizens? Jay Cohen says no.
In March, the U.S. government charged Cohen and 20 other Internet gambling site operators with violating the 1961 Wire Communications Act, which made placing or taking bets over phone lines illegal.
Cohen is the first to contest the charges, in a trial that started Feb. 14 in New York. The other 20 defendants, all U.S. citizens operating outside the country, have since pleaded guilty or remain fugitives -- including Steve Schillinger and Haden Ware, Cohen's partners in the site (www.wsex.com). A conviction carries a maximum sentence of five years and a fine up to $250,000.
''Jay strongly believes that he did not commit a crime, that he ran this company in a completely legitimate manner,'' says Benjamin Brafman, Cohen's lawyer. ''He feels confident that, if given an opportunity to have his day in court, that a jury will find him not guilty.''
The fact that Internet gambling is legal in Antigua is a major part of Cohen's defense, which Brafman expects to begin presenting after the prosecution rests today.
''As far as we're concerned, all bets are placed here on our server here in Antigua, which is a sovereign state and we're fully licensed,'' said Simon Noble of www.intertops.com, another Antigua-based gambling site.
But the U.S. government doesn't draw a distinction between making a bet on the Internet and calling a bookie, and the law might be on their side.
''It may not make a difference whether the server was located in Antigua, because the federal anti-gambling law in question applies broadly,'' said Jim Halpert, a Washington, D.C., lawyer familiar with Internet law. ''Typically, the fact that a site is doing business with consumers in a jurisdiction is sufficient to establish jurisdiction in the state where the consumer is located.''
The trial is expected to go to the jury later this week. The assistant U.S. attorneys prosecuting the case weren't available for comment, but U.S. Attorney General Janet Reno has been quoted as saying a conviction would help establish that the Web is not an ''electronic sanctuary'' from U.S. laws.
The decision will raise other questions. For example, can a foreign-based site sell a non-FDA-approved drug to a U.S. customer?
''This case is an important test of whether U.S. criminal laws apply to Web sites outside the United States, and it will establish a precedent that will be watched closely outside the gambling arena,'' Halpert said.
Still, a conviction probably won't squelch the estimated 800-plus sites currently taking bets.
''We are operating on a global basis in a global market, so what happens in . . . New York is unlikely to impact on a customer placing a wager in Malaysia,'' Noble said.
First Federal Net betting case begins
Ex-stock trader’s trial may affect how laws are applied online
By Adam Snyder
SPECIAL TO MSNBC.COM
reprinted from original article 2/14/00 click here
NEW YORK, Feb. 14 — In a closely watched case that may influence how nations deal with criminal conduct that crosses their borders via the Internet, a former stock trader went on trial Monday for allowing Americans to bet on sporting events through his Web site in Antigua.
JAY COHEN, president and co-owner of the World Sports Exchange sports book, was one of 21 owners and managers of nine offshore companies named in a series of highly publicized indictments in 1998 that charged them with illegally using interstate telephone lines to take online wagers from U.S. customers.
But while the other 20 have entered guilty pleas prior to trial, been dropped from the case or are fugitives, Cohen decided to fight the charges, which carry a maximum penalty of five years in prison and a $250,000 fine.
“Jay is a brave individual who believes if he gets a fair trial he will be exonerated of all charges,” his attorney, Benjamin Brafman, a partner in the New York City law firm of Brafman & Ross, told MSNBC. “He believes what he is doing is legal, and does not want to be a fugitive from the United States for the rest of his life.”
STAKES ARE HIGH
More is at stake in Cohen’s trial than determining whether federal law, which in part prohibits using “a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers,” applies to Internet wagering.
“This is an interesting case of asserting jurisdiction over overseas Web sites in a criminal context,” Jim Halpert, a Washington, D.C., lawyer specializing in Internet law, told the Financial Times of London. “It will be closely followed by companies doing business on the Internet, both in the U.S. and abroad.”
The case also is likely to have consequences for the young but rapidly growing Internet gambling industry, which at last count consisted of approximately 650 Web sites that take bets on sports contests and casino-style games of chance. All told, the sites are expected to generate revenue of nearly $1.5 billion this year, growing to more than $3 billion in 2002.
Many operators of online gambling sites and their supporters say that if the prosecution prevails in Cohen’s case, additional indictments of operators of sports-betting sites in the Caribbean and elsewhere are likely. Many also expect that prosecutors will next target purveyors of casino-style games, where the federal law is less clear.
Jury selection in the case began Monday in the U.S. District Court in Manhattan. The trial is expected to last two to three weeks.
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Updated Tuesday, October 16, 2001
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