SEC Hits Bettor Investments, Casino Dealer Proprietor With Securities Fraud Charges
Posted on: July 30, 2019, 02:56h.
Last updated on: July 30, 2019, 04:52h.
Bettor Investments, LLC, a now defunct Nevada company, and its only employee, founder Matthew Stuart, are facing fraud charges from the Securities and Exchange Commission (SEC).
In the SEC’s complaint, filed in federal district court in Las Vegas, the commission claims that the company and Stuart raised about $145,500 from 70 clients around the US for stakes in a sports betting enterprise, constituting an unregistered sale of securities.
In addition, the SEC alleges that, in late 2016 and early 2017, Bettor and Stuart refunded some of the investors’ money and converted the remaining investors’ funds into promissory notes with supposedly ‘guaranteed’ rates of return,” said the SEC.
By doing that, Stuart and his Reno-based company did not inform investors about about vital facts pertaining to the health of the business, including sports betting losses that had already been realized, relevant risk profiles, how Stuart was to be paid and the exact uses of client capital.
The SEC contends that at the time of the promissory note gambit, Bettor Investments and Stuart knew “that they had lost a significant portion of their investors’ assets and, given the limited funds available for wagering, could not reasonably expect to have the funds necessary to satisfy their promissory note obligations to investors upon maturity,” said the commission.
Court documents indicate Stuart currently resides in Post Falls, Idaho and is a staffer at an identified casino in the area. The state is home to seven tribal casinos and the closest gaming venue to Post Falls is the Greyhound Park & Event Center.
How Bettor Investments Came About
In 2015, prior to the 2018 decision by the the Supreme Court of the United States to strike down the Professional and Amateur Sports Protection Act (PASPA), Nevada policymakers passed Senate Bill 443. That legislation allowed for companies based in the Silver State to accumulate capital from investors anywhere in the world, deposit the funds in banks in the state, wager on sports and divvy the wins and losses up among the clients.
Bettor Investments, which was located at 4800 Kietzke Lane in Reno, sprouted up in September 2015. The company and others that appeared following the passage of Senate Bill 443 have been dubbed “sports mutual funds” because the owners purport to structure the vehicles similar to traditional funds that invest in stocks or bonds.
Bettor is not the first company in the field to run afoul of the SEC. Last year, the commission hit Nevada Sports Investment Group, LP with securities fraud charges. That company allegedly duped 30 investors out of more than $1 million.
There are legitimate players in the field. Some hedge funds are actively wooing investors with sports betting vehicles, promoting the ventures as “alternative investments” that can help reduce correlations to standard asset classes, such equities and fixed income.
Stuart and his company are facing anti-fraud and violating registrations requirements claims from the SEC.
The commission charges “Bettor and Stuart with violations of the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”), and the antifraud provisions of Section 17(a)(2) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5(b) thereunder,” according to a statement.
The Securities Act of 1933 and the Securities Exchange Act of 1934 are the primary federal laws under which securities cases are prosecuted.
Punishment for violating those laws can include fines of up to $5 million, prison sentences of up to five years per count and mandatory restitution.
Related News Articles
Related News Articles
- September 25, 2020 — 14 Comments—
- October 26, 2020 — 8 Comments—