John F. Thomas, Thomas Becker, Douglas Martin, Paul Hanson, Damian Ostertag, Einstein Sports Advisory, LLC, QSA, LLC, Vegas Basketball Club, LLC, Vegas Football Club, LLC, Wellington Sports Club, LLC, Welscorp, Inc. and Executive Financial Services, Inc.
SEC Charges Sports Betting Investment Scheme Operators with Fraud
Litigation Release No. 24585 / September 4, 2019
Securities and Exchange Commission v. John F. Thomas, Thomas Becker, Douglas Martin, Paul Hanson, Damian Ostertag, Einstein Sports Advisory, LLC, QSA, LLC, Vegas Basketball Club, LLC, Vegas Football Club, LLC, Wellington Sports Club, LLC, Welscorp, Inc. and Executive Financial Services, Inc., No. 2:16-cv-01515 filed August 30, 2019.
The Securities and Exchange Commission today announced fraud charges against two individuals and six entities relating to an ongoing, Nevada-based $29 million sports betting investment scheme impacting over 600 investors from more than 40 states, as well as other charges against three individuals and a company who sold investments.
The SEC's complaint alleges that convicted felons, John F. Thomas and Thomas Becker, and several entities they control, promised investors 250% to 600% returns from pooled investments in sports betting, using what they claimed was a proprietary handicapping system. The complaint, however, alleges that they used the majority of investor money to fund their lifestyles, pay commissions to brokers and agents, or make Ponzi-like payments to other investors. The complaint further alleges that they misrepresented to investors the investment performance of the funds that were actually invested in sports betting. The complaint also alleges that Douglas Martin, Paul Hanson, Damian Ostertag, and a company owned by Martin sold unregistered securities without being registered as brokers or associated with a registered broker.
The SEC's complaint, which was filed in the United States District Court for the District of Nevada on August 30, 2019, charges Thomas, Becker, Einstein Sports Advisory, LLC, QSA, LLC, Vegas Basketball Club, LLC, Vegas Football Club, LLC, Wellington Sports Club, LLC, and Welscorp, Inc. with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Section 5(a) and 5(c) of the Securities Act. The complaint also charges Martin, Hanson, Ostertag, and Executive Financial Services, Inc. with violating the broker-dealer registration provisions of 15(a) of the Securities Act and the registration provisions of Section 5(a) and 5(c) of the Securities Act.
The SEC's investigation was conducted by Matthew Montgomery and Deborah Russell, and was supervised by Robert Conrrad. The SEC's litigation will be handled by Lynn M. Dean and Matthew Montgomery, and supervised by Amy Longo.
Last Reviewed or Updated: May 31, 2023