Eleven indicted in multi-million-dollar sports betting tax evasion scheme
US authorities issue 114 count indictment over “Red 44” scheme which laundered money through offshore betting service in Costa Rica
Authorities in Alabama have issued a 114-count grand jury indictment against 11 defendants charged with evading US taxes through an offshore sports betting service.
The record indictment was issued by the Alabama District Court on Friday and relates to the activities of the “Red44” organization which is estimated to have accepted hundreds of millions of dollars from sports bettors between 2019 and 2021.
The lead defendant in the case, Timothy J. Pughsley, began operating a bookmaking business in 2004, with all bets placed occurring online via offshore servers located in Costa Rica.
Pughsley, a native of Birmingham, Alabama, has been charged with 38 counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and four counts of money laundering.
Other defendants named in the indictment include alleged “senior agents” within the Red44 organization as well as original founding members.
These include six residents of Alabama and other individuals from Tennessee, Massachusetts, Colorado, Nevada, and Georgia, respectively.
In 2019, the Red44 group was alleged to have earned almost $15m in gross profits from the scheme, evading the US’ 2% excise tax, which would have amounted to $6m.
In 2020, Red44’s gross profits rose to $24m, with taxes evaded totaling $6m, rising to $36m in gross profits during 2021 when over $7m in tax was evaded by the group.
The indictment confirms the investigation was led by IRS Criminal Investigations and the Department of Homeland Security. Prosecutors on the case include US Attorneys Catherine Crosby, Kristen Osborne, and Ryan Rummage.
The case continues.