Cantor Fitzgerald affiliate pays USD 22.5M to settle gambling probe

According to a Reuters news report, federal prosecutors in Brooklyn said CG Technology LP had agreed to pay $16.5 million and enter into a non-prosecution agreement, three years after a former executive pleaded guilty to conspiring to participate in an illegal gambling business.

The U.S. Treasury Department's Financial Crimes Enforcement Network separately announced a $12 million civil penalty against CG Technology, $6 million of which will be covered by the company's criminal fine and forfeiture.

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Prosecutors said CG Technology, at the time known as Cantor Gaming, from 2009 to 2013 aided and abetted the operation of an illegal gambling business and money laundering while growing into one of the largest U.S. race and sports book operators

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"Unacceptably, this growth came at the expense of compliance with the law, and as a result Cantor Gaming became a place where at least two large-scale illegal bookmakers could launder their ill-gotten proceeds," Brooklyn U.S. Attorney Robert Capers said.

Prosecutors said Cantor Gaming offered higher betting limits than others in the area, seeking to attract and retain bettors who would frequently place large wagers on sports events.

It also gave important bettors preferential treatment, including direct access to Michael Colbert, the company's director of risk management, prosecutors said.

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To accommodate some of these bettors, Colbert and his staff facilitated illegal conduct, including allowing the use of runners to place bets for third-parties in exchange for compensation, prosecutors said

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Colbert and his staff also processed large cash deposits, withdrawals and third-party wire transfers while knowing the funds represented the proceeds of illegal activity, prosecutors said.

Prosecutors said Cantor in settling admitted to violating federal laws, is cooperating with authorities and has taken steps to reform its business and compliance operations.

Colbert pleaded guilty in August 2013 to conspiracy to conduct an illegal gambling business. He faces up to five years in prison when he is sentenced.