This week, a federal case involving a multi-million-dollar illegal sports betting operation ended with 10 defendants pleading guilty to multiple charges.
United States Attorney Prim F. Escalona and Special Agent in Charge Demetrius Hardeman of the Internal Revenue Service Criminal Investigation, Atlanta Field Office announced the following defendants signed plea agreements:
Timothy J. Pughsley, 53, and Nathan Burdette, 39, of Birmingham, Alabama; Christopher Burdette, 32, of Chelsea, Alabama; Thomas Zito, 59, of Vestavia, Alabama; Gary Rapp, 46, of Lakeland, Tennessee; Mark Giaquinto, 52, of Upton, Massachusetts; Matthew Voorhees, 49, of Englewood, Colorado; David Richards, 39, of Las Vegas, Nevada; and Joshua Gentrup, 38, of Athens, Georgia, entered their guilty pleas before United States District Judge Madeline Haikala to conspiring to operate an illegal gambling business and to their participation in a money laundering conspiracy. Jonathan Lind, 46, of Birmingham, Alabama, also pleaded guilty to conspiring to operate an illegal gambling business.
Sentencing hearings for the defendants are set for May 2025.
Pughsley started the operation, which eventually became known as "Red44," 17 years ago. According to court documents, betting activities were conducted online using an offshore server in Costa Rica.
The indictment stated that some of the defendants held conferences each year, usually in August, to talk shop. Those conferences were held in Costa Rica, New York, San Francisco, Chicago, Nashville, and Houston.
During the conferences, Pughsley reportedly gave updates on profit and the number of people betting with Red44. Because of information obtained by investigators, they believe that since at least January of 2018, the "defendants have received large amounts of proceeds from an illegal gambling business that was owned, operated, and managed in the Northern District of Alabama."
During the 2021 conference in Houston, Gentrup is accused of saying the organization was "not in the business of breaking kneecaps" to collect but that it used intimidation over the phone to ensure collection from bettors.
Specific events listed in the indictment include cash exchanges. One of those exchanges happened in November 2021 when prosecutors say Pughsley counted cash in Zito's car in the parking lot of Saltgrass Restaurant on U.S. Highway 280. The other account occurred on December 10, 2021, at a private party at Mexicali Blues in Trussville.
Over $2 billion in wagers were accepted over the course of Red44's operations. Restitutions agreed upon total nearly $20 million to the IRS.
"These guilty pleas are the end result of years of hard work by members of federal and state law enforcement agencies to enforce our nation's gambling and tax laws," Escalona said. "The defendants illegally accepted millions of dollars in wagers and lived lavishly while avoiding their excise tax obligations. This office will diligently pursue those who enrich themselves in violation of the law."
"Excise tax evasion and illegal sports betting are not victimless crimes," said Hardeman. "Money obtained from illegal gambling operations is often used to finance other criminal activities. IRS-CI special agents are skilled at following the money to investigate and expose these illegal organizations, who will be held accountable. Thank you to our local, state, and federal partners who assisted in this investigation."
IRS-Criminal Investigation and Homeland Security Investigations investigated the case, with assistance from the Vestavia Hills Police Department, Shelby County Sheriff's Office, Alabama Department of Revenue, and the Federal Bureau of Investigation.
To connect with the author of this story or to comment, email erica.thomas@1819news.com.
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