N.Y. freezes Net gambling firm
State attorney general Dennis Vacco continues his high-profile Net crusade, accusing a Internet wagering company of deceptive practices.
New York prosecutors filed an affidavit against Bohemia, New York-based World Interactive Gaming Corporation to block the transfer of $750,000 in investor funds to the company's offshore site in Antigua. The company had been under investigation after the state learned that the WIGC was soliciting investors with common stock offerings and promises of huge profit margins and investment returns, Vacco's office said in a statement.
The office further
alleged that the WIGC had "engaged in promoting high-risk securities to unknowing investors by means of false representations, omissions of material facts, use of unregistered salespeople, and other fraudulent and deceptive practices."
In addition, "WIGC was represented to investors to potentially bring in incredible returns on investment as a successful enterprise when, in fact, gambling of this kind is illegal in New York," Vacco said in a statement.
Federal law under the Wire Communications Act prohibits gambling operations from accepting bets over telephone wires; that has been the stimulus for Vacco's anti-Internet gambling efforts. New York also has claimed that Internet gamblers conspired to violate the Wire Act with their operations. Along with New York, states including Wisconsin, Missouri, and Minnesota follow the same argument that cybergamblers are breaking the law when they place bets from a state where gambling is illegal.
However, federal legislation has been moving in Congress to update the Wire Act and outright prohibit taking and/or placing bets over the Net, as seen in the Internet Gambling Protection Act introduced by Sen. Jon Kyl (R-Arizona).
Vacco has been zealous in his crackdown on illegal Net activities. He has slammed pyramid schemes, online sales of alcohol to minors, and child pornography since late last year.
The New York AG's office was notified of the WIGC's investment solicitations after Kenneth Hooper, an officer with the Texas state securities board, received a "cold call" from a WIGC employee, offering Hooper an opportunity to invest in the Internet gambling company, according to the affidavit. Hooper then received a follow up by Greg Flemming, WIGC's vice president of marketing, who described the WIGC's potential revenue estimates and return percentages for a $10,000 investment.
After receiving investment information from the WIGC and noticing a New York return address, Hooper reported the incident to Vacco's office.
The WIGC maintained in its sales pitch that its company's operations were legal because its servers were located in Antigua.
Nonetheless, Vacco's office froze the attempted transfer of funds from the WIGC's New York bank account to build on the investigation to determine whether charges can be filed against the Long Island company. The office said that the WIGC's practices may have violated New York's Penal Law and the Federal Wire Communications Act.
"The Internet has opened an entirely new venue of potential stock fraud which has as of yet been largely unexplored. Now more than ever, investors need to be vigilant," Vacco said in the statement.