Double Down

Carruthers professionalized the operation by bringing in a cadre of British executives with decades of experience in the business. They were beginning to upgrade technology and weed out drug-addled employees. Kaplan, for his part, had become depressed after selling most of his shares and gone on a two-week cocaine binge, according to court papers. But by 2006 he was consulting for the company again. Former employees say he was helping BOS strike partnerships in South America while Carruthers worked on business development across Asia.

In the company's annual report dated May 31, 2006, Carruthers stated: "BOS will remain at the forefront of any debate, winning friends and influence." Unofficially, the firm was predicting profits of $44 million for the coming year. The very next day on June 1, a grand jury in St. Louis handed down its sealed indictment. Six weeks later authorities arrested Carruthers at the Dallas airport as he and his wife made their way to Costa Rica from London. According to a friend, Carruthers had no inkling of the magnitude of the charges he was facing. He thought the company would bail him out the next day and business would go on as usual.

On the contrary. The BOS board of directors fired Carruthers a week later, most likely in hopes of avoiding prosecution. For the last year the Scot has been under house arrest at a rented apartment in Clayton on the Park, learning Mandarin Chinese, watching Boston Legal and rooting for the St. Louis Cardinals. BOS went belly-up last fall.

"There was talk right after the arrest that Gary would never have shut down the company," says Tom Jensen. "He would have made them drag him out of there. The problem was they had become so transparent by becoming a public company. If they were still private, Gary would have probably said to the feds, 'Come on down here and pound sand.'"

To this day speculation rages in the industry as to why BOS became a Justice Department target. Some people believe it was because there was illegal "credit" betting allegedly occurring under Kaplan's watch. The old-school, corner-bookie business model basically allows a gambler to make multiple wagers without depositing money offshore. On the weekly "settlement day," an "agent" and the bettor meet to collect or pay out.

Other insiders blame Kaplan's and Carruthers' aggressive self-promotion. Many believe the public disclosure associated with the company's IPO precipitated its demise. "There are people that have filled the void left by BETonSPORTS," observes Chris Flood, Kaplan's lead attorney.

The gambling community also remains mystified about the decision to prosecute the case in St. Louis. Undercover F.B.I. agents placed wagers with BOS from computers and phones here, but that is the company's only ostensible link to the city. Government sources, who asked not to be identified, said the decision was merely a question of resources and experience.

Lawrence Walters, a Florida-based attorney who specializes in Internet law and once advised BOS, believes the U.S. Attorney's case has problems. The Wire Act, he says, "Was intended to address your run-of-the-mill bookies who were accepting bets with paper notes and taking them to organized crime families. That's not what is going on with Internet gambling. These are multimillion-dollar companies listed on foreign stock exchanges, operating in countries with licenses issued by their own governments." The U.S. Attorney's Office declined to comment for this article.

According to an affidavit, the prosecutors' investigation continues. They recently indicted Kaplan's longtime bookkeeper, 62-year-old Penny Tucker of Miami, who allegedly controlled at least one of Kaplan's bank accounts — one that helped him remain on the lam. A confidential source for the government saw Tucker being escorted to the San José airport in Costa Rica by Kaplan's bodyguards last December. Gary Kaplan himself was just leaving Israel at that time, where he had apparently been since the first round of arrests in July 2006. His friend Eduardo Agami ran into Holly Kaplan not long afterward.

"They were speaking on the phone and I said, 'Let me say hello,'" recounts Agami. "I said, 'Hi, how are you doing, I hope everything's all right and I hope to see you soon.'"

To which Gary Kaplan replied, "Me too."

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Holly Kaplan was still grasping her "good luck" stone after her husband's second detention hearing ended September 5. "I'm doing OK," she says. "It's the hardest for my kids. They keep asking, 'Why our daddy? Why our daddy?' In Costa Rica all their friends' dads were in this business."

During the hearing Judge Jackson repeatedly expressed her "fundamental problem" with a defendant paying for his own security. On September 28, Jackson denied Gary Kaplan's plea to be placed on house arrest. The court is currently considering the defendants' motions to throw out the charges, on the basis of World Trade Organization rulings that the United States' attempts to ban Internet gambling violate international treaties. No trial date has been set.

Two weeks after the hearing Holly Kaplan left the country for some spiritual rejuvenation her mother, Sandra Hoeffer, says. "I'm disappointed that for all the good they did for the people of Costa Rica the government did not stand behind him," says Hoeffner, referring to charitable projects with orphanages, health clinics and victims of domestic abuse, which her daughter funded.

As for Gary Kaplan, according to Hoeffner, he's holding up well, appreciative of little luxuries like a makeshift tuna casserole prepared from staples he buys at the prison commissary. No gourmet, Kaplan always did like to cook.

Asked about Kaplan's motivations, Hoeffner sums it up this way: "This was never about money for Gary. It was about entrepreneurship. Gary was always working, from morning until evening. He ate and slept business. His mind never stopped. Even now he's probably in there thinking, 'I've got an idea for a business.'"