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Some of the more than 400 proposition bets for Super Bowl LI are displayed as we look at the details surrounding the YieldSec report on illegal U.S. sports betting
Some of the more than 400 proposition bets for Super Bowl LI are displayed at the Race & Sports SuperBook at the Westgate Las Vegas Resort & Casino in Las Vegas, Nevada. Photo by Ethan Miller/Getty Images via AFP.

The U.S. legal sports betting industry has avoided any major incidents of fraud since the Supreme Court overturned its blanket ban on sports wagering in 2018, partly because of the emphasis our best sportsbooks put on prevention. However, small fraud examples, including one from this past week, are starting to make their way into the newswires.

One of the few incidents of fraudulent activity that came to a head this week was the arrest and indictment of a Pennsylvania man accused of running a fraudulent sports betting fund and bilking investors out of $500,000.

According to a press release by the United States Attorney’s Office, Eastern District of Missouri Tuesday, "Elijah A. Goshert, 47, was indicted on Nov. 15, 2023, on three counts of wire fraud."

He was originally arrested on Feb. 28 and pleaded not guilty on all charges.

The scheme

According to the United States Attorney's Office, Goshert was "accused of defrauding investors in a sports betting fund for more than five years."

The accused informed investors of a scheme that involved a "sophisticated computer algorithm" for his Magellan Sports Fund. It promised that the computer program would substantially reduce sports betting risk for investors willing to invest in the Magellan Sports Fund.

Goshert told the Fund's investors that it wouldn't make money unless the bets paid out. It turned out that the accused misappropriated funds and used them for his personal use. 

It is alleged that Goshert used investment funds for "his personal expenses, including Disney vacations, private school tuition and mortgage payments." According to the indictment, at least 10 investors were taken by the scheme to the tune of more than $500,000.

Goshert's scheme included fraudulent updates, statements sent to investors, and lies about where their money had gone. The lies metastasized when investors attempted to withdraw funds from the Magellan Sports Fund.

In the end

Goshert has been charged with three counts of wire fraud and faces up to 20 years in prison and a $250,000 on each count if found guilty.

The fraud case is the latest warning for investors wanting to throw their hard earned money behind unproven and unsanctioned investment funds. Sports betting was just a vehicle for the fraud scheme in this case and is something for investors and sports betting aficionados to watch out for in the future.