Pleaded guilty to two counts
A Utah man is facing a ten-year prison sentence after he was indicted for participating in an allegedly fraudulent $7m sports betting scam. Christopher D. Hales, 39, pleaded guilty to federal wire fraud conspiracy and money laundering conspiracy in front of US Magistrate Judge Daphne A. Oberg last week. The plea agreement includes “a stipulated ten-year sentence, subject to the Court’s approval.”
Hales, who is from the Utah city of Lehi, was indicted in connection with a financial fraud plot he concocted with the aid of unnamed co-conspirators while serving a sentence for another federal fraud case in a halfway house.
conspired to defraud investors and potential investors”
According to the Utah US Attorney’s Office (USAO), a Felony Information (FI) filed in the case alleges Hales “conspired to defraud investors and potential investors” via a business identified as Sindakit Software LLC. Hales and a co-conspirator (CC1) achieved this by convincing investors to give them money to place sports bets after claiming to own sports betting software that “beat the house.”
As a consequence of the scheme, investors lost at least $7m, the Utah USAO said.
US Attorney John W. Huber said that Utah had an “outsized fraud problem” and that the allegations against Hales illustrated the behavior of “a serial schemer.”
Special agent in charge Paul Haertel of the Salt Lake City FBI said: “A judge once told Christopher Hales he was addicted to defrauding people.”
Haertel added that the reality was that “most fraudsters have no remorse or conscience, and they often re-offend.”
used the ill-gotten gains to to fund a lavish lifestyle
Hales was initially convicted in April 2011 of bank fraud in conjunction with mortgage fraud. According to a 2011 report in Utah newspaper Deseret News, Hales used the ill-gotten gains to to fund a lavish lifestyle, including throwing $100,000 parties in Las Vegas. Sentenced to 90 months in federal prison, Hales was ordered to pay over $12.7m in restitution.
After violating terms of his supervised release in 2016, Hales earned himself an additional federal prison sentence of 30 months.
According to FI, Hales was released from federal prison in Feb 2018, at which point he moved into a halfway house in Salt Lake City. Nevada Secretary of State records reveal that Sindakit Software LLC was set up in August 2018 by a CC1 of whom federal prosecutors are aware.
Web of deceit
Once the company was set up, Hales started doing his thing. According to the FI, he introduced himself to investors as Chris Christian and assured them that he would match all investor funds. What Hales did in reality was take out a line of credit with a sports wagering website and used those funds to hedge bets.
In addition, Hales told investors that the rate of return on the sports betting was approximately 10% per week – a fictitious figure used to encourage investors to provide funds. He also claimed potential buyers were willing to buy his software “for tens of millions of dollars,” whereas the FI revealed there weren’t any buyers at all.
According to the Utah USAO, in furtherance of the conspiracy, Hales did not disclose to investors that his company did not actually own any sports betting software or algorithm. Instead, Hales was laundering investors’ funds through the Sindakit account.
a tactic straight out the Ponzi scheme playbook
Hales also did not reveal he was using “investment money from newer investors to pay promised winnings to earlier investors,” a tactic straight out the Ponzi scheme playbook. Special agent in charge at IRS criminal investigation Tara Sullivan said: “Hales is a bad apple that has continuously fed his greed and preyed on others too many times.”
Assistant US Attorneys in the Utah USAO are prosecuting the case, while special agents from IRS criminal investigation, in addition to the FBI, are conducting the investigation.