Lehi man pleads guilty to sports betting scheme that cost investors $7 million
(KUTV) — A Lehi man plead guilty Tuesday to charges accusing him of managing a sports betting fraud scheme that resulted in a loss to investors of at least $7 million.
Christopher D. Hales, 39, devised the plan with co-conspirators while in a halfway house serving a sentence for another federal fraud case, according to the Utah U.S. Attorney's Office.
The plea agreement includes a stipulated 10-year sentence, subject to the court's approval.
Federal prosecutors asked for detention following the change of plea and Hales did not contest.
In April 2011, Hales was convicted of bank fraud as part of a mortgage fraud case. He was sentenced to 90 months in federal prison and was ordered to pay $12,719,236 in restitution, according to the Utah U.S. Attorney's Office. In 2016, he violated the terms of his supervised release and was sentenced to another 30 months in federal prison.
Hales was released from prison in February 2018 and resided at a halfway house in Salt Lake City until the following August.
Nevada Secretary of State records show Sindakit Software LLC was formed on Aug. 6, 2018, by a co-conspirator, referred to as CC1, known to federal prosecutors. CC1 was listed as the sole officer and not publicly identified by DOJ's District of Utah. CC1 was listed on the Sindakit Software bank account as the manager and was the only authorized signor.
Utah U.S. Attorney's Office reports Hales and CC1 conspired to defraud investors and potential investors by convincing them to purchase investments in sports betting software. Hales said he owned a sports betting software that "beat the house" to convince investors to give money to place sports bets.
He also reportedly made a variety of false statements of material facts to investors and potential investors, including that 100% of investor funds would be used to place sports bets. But, nearly all the funds were diverted to Hales and CC1's personal use and to make payments to other investors.
"Investors were also told Hales would match all investor funds when in reality he would take out a line of credit with the sports betting website and use the line of credit to hedge bets," a press release from DOJ District of Utah states. "Hales also told investors that the sports betting was producing a rate of return for investors of around 10% a week – an amount made up by Hales to entice investors to provide funds. He also represented that there were potential buyers willing to purchase the software he developed for tens of millions of dollars, when there were actually no buyers, according to the felony information."
Hales also went by a different name, Chris Christian, and failed to disclose to investors that they did not own an algorithm or sports betting software. Nor did he mention that the funds were being transferred in and out of the Sindakit Software account. They did not disclose that part of the investors’ money was used to pay commissions to those introducing investors to Sindakit or that they were using investment money from newer investors to pay promised winnings to earlier investors in what is commonly recognized as a Ponzi scheme, according to the Utah U.S. Attorney's Office.
“Utah has an outsized fraud problem, and these allegations illustrate the conduct of a serial schemer. Utahns must diligently consider investment pitches and their risks before parting with hard-earned savings,” U.S. Attorney John W. Huber stated in a news release.
Assistant U.S. Attorneys in the Utah U.S. Attorney’s Office are prosecuting the case. Special agents of the IRS Criminal Investigation and the FBI are conducting the investigation.
Individuals charged in complaints are presumed innocent unless or until proven guilty beyond a reasonable doubt in court.
