The rise and fall of Wayne Nixs sports-betting empire

July 13, 2024

Every detail of Grove XXIII, a private golf club in Hobe Sound, Fla., reflects the preferences of its founder, Michael Jordan.

The club shuns phones, photos and gossip about what happens on its grounds. The play is fast, with drones delivering drinks to players in souped-up golf carts and caddies keeping up on scooters. And memberships, which cost hundreds of thousands of dollars, are invite-only.

So it was notable when pairings from the club’s December 2021 member-member tournament surfaced online, shedding light on the coterie of celebrities and business titans invited to play: John Elway, Wayne Gretzky, Rory McIlroy, Mark Wahlberg, Ari Emanuel, Bret Baier, Milwaukee Bucks co-owner Wes Edens, Boston Celtics majority owner Wyc Grousbeck and Houston Astros chairman Jim Crane.

So, too, was it notable that the roster included a lanky former bush league ballplayer whose source of wealth was more mysterious. Wayne Nix sometimes gave his occupation as “concierge” or “consultant.” His friend Scottie Pippen, Jordan’s longtime Chicago Bulls teammate, posited vaguely that Nix lived off “the fruits of his labor.”

But his actual profession would be revealed in an indictment unsealed a few months later: bookie. And his ability to blend in among celebrities such as those at Grove XXIII was, records and interviews show, key to his role in building a sprawling, multimillion-dollar offshore sportsbook with more than 1,000 clients, including power brokers from the sports and entertainment industries. Nix pleaded guilty last year to conspiracy to operate an illegal gambling business and filing a false tax return.

The identities of most of Nix’s clients are shrouded in court records. But The Washington Post shed light on two earlier this week: Maverick Carter, the business manager and partner of Los Angeles Lakers superstar LeBron James, who admitted to gambling on NBA games through Nix, and Pippen, who also acknowledged placing at least one bet through Nix.

A spokesman for Carter said he was “not the target of the investigation, cooperated, was never charged, and never contacted again on the matter.” Pippen, who also was not charged with any crime, did not respond to multiple requests for comment.

There is nothing in records to suggest that Jordan, who until recently owned the NBA’s Charlotte Hornets, was a client. His longtime agent, David Falk, who also golfed in the 2021 tournament, said he does not know Nix “at all” and declined to comment on what if any relationship Jordan has with him. Nix and his attorney declined to comment.

Federal prosecutors have indicted at least 10 other people in the case, records and interviews show, including Nix’s fellow bookies, a Hollywood accountant who helped facilitate the operation (and bet on one of his own athlete clients) and former Los Angeles Dodgers phenom Yasiel Puig, whom prosecutors accused of lying to investigators about placing hundreds of sports bets.

The Post used previously unreported records, including search warrant materials, federal investigative reports and confidential legal correspondence, to provide the fullest picture yet of an international betting operation that had inroads throughout the sports world — taking bets from football and baseball players, coaches and a sports broadcaster who allegedly paid his debts to Nix by refinancing his home mortgage.

The records also point to bets by the manager of a billion-dollar bond fund, an arena-filling DJ and a billionaire’s son whose family name adorns a stadium in Ohio. One client bet $5 million on the outcome of the Super Bowl, prosecutors say.

Beyond Nix’s operation, the records shed light on a multibillion-dollar offshore sports betting industry that has shown few signs of receding even as the legal industry has boomed.

Legal sports betting is now available in 38 states and Washington, D.C., raking in an estimated $7.5 billion in revenue on $93.2 billion in total bets last year. The revenue of its underground counterparts is less reliably tabulated. But the American Gaming Association, an industry lobbying group, estimated that illegal sports betting operations profited $4 billion on $64 billion in total bets last year, with nearly half of all U.S. sports bets placed through an illegal operator.

The association’s president and CEO, Bill Miller, has urged law enforcement officials to do more to stamp out offshore operations that siphon away legal profits. “We have the same level of regulatory scrutiny as banks,” Miller told The Post. “If we’re going to operate here in the U.S., under the appropriate constraints that we have, we should at least have law enforcement to help us and support us.”

In this case, court records show, federal agents were initially focused on following the money trail to Nix’s alleged partners in Costa Rica. And though one of those offshore operators was indicted and pleaded guilty in secret proceedings, The Post found, he appears to still operate an offshore gambling company — complete with the same phone number.

When a reporter called an 800 number listed on a four-year-old search warrant application as belonging to the Costa Rican operation, a chipper voice answered.

“Sports!” the voice said, sounding ready to take a bet.

THROUGHOUT THE SPRING of 1995, MLB scouts crowded high school bleachers in the San Fernando Valley, eager to see a 6-foot-5 phenom with a fastball near the mid-90s and multiple no-hitters. Eventually, it was the Oakland Athletics who landed Wayne Nix, drafting him in the second round and signing him with a $97,500 bonus.

But even back then, Nix was prone to risky stunts. Multiple people said Nix attracted the scorn of his minor league coaches because he liked to show off his throwing arm by hurling a ball from the outfield to home plate. A shoulder injury that derailed his nascent professional career, one teammate said, was the result of Nix wagering his teammates as to how far he could throw the ball.

By 2001, Nix was out of baseball. Six years later, he registered Nixy Enterprises out of the office of his accountant, Hollywood business manager Eric Fulton, whose clients have included actors Channing Tatum and Rosario Dawson and mixed martial artist and boxer Conor McGregor. (Fulton did not respond to multiple requests for comment.) By then, according to prosecutors, Nix had taken up bookmaking.

Sports betting was legal only in Nevada then. Operators of offshore gambling websites believed they had found a legal loophole. American prosecutors disagreed, but a seminal case showed the challenges of bringing offshore bookies to justice. Prosecutors secured a 21-month prison sentence for an American man who ran a sportsbook based in Antigua, the first such conviction. But the tiny Caribbean government sued the United States — and won — for squelching commerce in violation of their trade agreement.

Since then, prosecutors have played a sporadic game of whack-a-mole, doing little to put a dent in the offshore industry. “This is not a law enforcement thing; this is a diplomatic thing,” said Richard Schuetz, formerly a gaming commissioner in California and Bermuda. “Nobody in the State Department wants to piss off one of these countries over something like betting.”

Old-school bookies took note and adapted. In 1999, the Los Angeles police raided a Torrance, Calif., strip mall, arresting two bookies, Joe Castelao and Daniel Soto. They pleaded guilty, received probation and soon enough were allegedly running their business from overseas — the same business that would take action from clients such as Carter and Pippen.

Castelao ran SandIslandSports.com, which was registered in Costa Rica in 2008, court records show. He stayed in the Los Angeles area, where he owned a trucking business and staged an annual rally for remote control planes. Soto and his brother Matthew, meanwhile, ran the operation from Costa Rica, federal agents alleged.

In its early days, the website was brazen. It provided detailed instructions on how to deposit money using MoneyGram, plus a customer service number, email address and operating hours: from one hour before the start of the day’s first baseball game to halftime of the last NBA game.

It’s unclear how Nix got involved. But according to court records, he built a network of bookies who collected bets from American customers and placed them either on the Sand Island Sports website or through its 800 number. It was a motley and well-tanned crew, many with eclectic day jobs offering cover for the millions of dollars in bets they handled.

One, Matt Funke, had moved from North Dakota to try to make it in Hollywood. His biggest role was in a 2015 self-financed movie titled “Americons” that the New York Times called a “hot mess.” In one scene, Funke’s character is boarding a private jet when someone says he doesn’t even know what he does for a living.

“We do what we want!” Funke responds.

The B-movie stylings weren’t far off from reality for Funke, who posted photos to Instagram of himself flying private, relaxing on yachts and fanning out thousands of euros while gambling in Monte Carlo.

Mike Masini, a producer of “Americons,” said he never thought to second-guess the finances of Funke and Funke’s friend who co-wrote the film, saying they “were just men about town.”

Funke’s work as a bookie spanned a decade or more, according to court records, which show how the money flowed. Over six days in late 2012, according to a search warrant application, Funke wrote five checks to Cliffsite Travel, a Costa Rican company, totaling $42,777, supposedly for “Film Travel.” The travel agency was a front for Sand Island Sports, investigators said, and the checks were strategically apportioned to avoid drawing suspicion from the bank.

Then there was Edon Kagasoff, who prosecutors said “operated the day-to-day functions of Nix’s gambling business.” He came by it naturally: His father, Harvey Dick Kagasoff, was convicted in the 1970s of running a bookmaking operation out of a flower shop in Newport Beach, Calif., court records show. Edon took a different route: After nearly winning a contest for Structure, the clothing brand, he spent time as a touring underwear model. But he ultimately became a bookie. His friends on payment app Venmo, which makes public some of the contacts in a person’s phone, suggest a Rolodex of professional athletes and Las Vegas high rollers.

A third bookie, Ken Arsenian, co-founded a national chain of infrared sauna studios, headquartered in Newport Beach. But his bookmaking income dwarfed his sauna business, court records show. In 2016, Arsenian reported $35,000 in income on his taxes. The IRS countered that he had actually earned more than $3 million that year — $2.7 million of it in “unexplained checks” handled by Nix’s preferred check-cashing business. Arsenian disputed that figure in court but ultimately agreed to pay more than $250,000 in back taxes and penalties for that year.

A fourth alleged “agent” for Nix had a frame and résumé like his boss’s: Erik Hiljus was a 6-foot-5 former pitcher for the Athletics and Detroit Tigers. Funke, Kagasoff, Arsenian and Hiljus did not respond to requests for comment.

This colorful collection of bookies offered its American clients an attractive alternative to traveling to Las Vegas to place bets. For many gamblers, offshore outfits remain attractive, even if their states have legalized sports betting, according to podcaster and former bookmaker Dave Sharapan, who previously worked at a betting operation based in Curaçao. They are discreet (or at least try to be), take credit and are less rigid with the action they accommodate.

“They operate just like the old ‘Louie the Lip’ bookie used to operate,” Sharapan said. “Call me up, make bets, meet you on Tuesday.”

Of course, betting with such operations carries risks. In 2021, records show, federal agents investigated a “collection attempt” by men working for a suspected Sand Island Sports bookie. According to the agents’ report, two men with Eastern European accents showed up at a law office and threatened employees there about gambling debts owed by one of the firm’s lawyers.

No one was arrested, and prosecutors have not suggested that Nix or his associates used violence to collect. But they did spend a lot of their time chasing down debts. In one case, a cemetery manager racked up $20,000 in losses to Nix and then left town, records show. “I just need a couple days,” the gambler eventually told Nix. “I’ll get everything together.”

Nix’s fellow bookies, or smaller-time “agents,” appeared just as busy trying to scare up cash to pay winners. In a wiretapped conversation detailed in a search warrant application, Funke told Nix about a gambler who had won $20,000 on baseball and wanted to increase his wagers to $5,000 per game: “[I]f he gets hot, I don’t have the bank right now.”

The bookies regularly helped cover each other’s losses, so Nix suggested he get a loan from Kagasoff. In another conversation described in court records, a partner asked Kagasoff for help paying back the winnings of a gambler who wagered about $1 million per year. In exchange, the bookie promised, he would let Kagasoff borrow his Ferrari for a month.

By 2019, Nix was an unsubtle fixture in Southern California and Las Vegas. He was such a regular at 1 Oak, a nightclub on the Las Vegas Strip, that his VIP seat had a pillow embroidered with his name — as shared online by Jordan’s son Marcus, who hashtagged the photo #teamjordan.

Nix lived in a sprawling, Tuscan-style villa on a hill in Orange County. Property records show that the home was owned by Fulton, Nix’s Hollywood accountant. In 2019, Nix threw a Super Bowl party for his clients, boasting to one of them that he had invited a former NBA player and the Hawaiian Tropic girls, according to an indictment.

Pippen’s interview with federal authorities shed light on the deals Nix cut for some gamblers. Pippen said that for the Super Bowl that year, Nix offered him a $20,000 bet for which Pippen only had to risk $2,500 — but then “waived” Pippen’s loss on that wager anyway.

Back at the call center in Costa Rica, the Sotos appeared immersed in the details of the action, according to wiretap excerpts included in court records. A stateside agent, Howard Miller, called to update them on bets and debts.

“Good morning,” Miller greeted Daniel Soto in 2019. “2650.”

It was a numerical code for a gambler. Soto fact-checked his first name: “Rich?”

They then continued a lazily coded conversation about various gamblers, with Soto noting that one of them — whom he called Miller’s “other buddy” — hadn’t paid his debts in a while.

“Is he broke or what?” Soto asked.

When Miller responded that the indebted gambler had promised to pay soon, Soto responded simply, “They all run out sooner or later.” (Miller’s attorney declined to comment.)

That was the central premise of any bookmaking operation, and for years it proved profitable. But eventually, one of their clients broke the mold – and threw them into chaos.

They called him “Big Guy.” He isn’t identified in public court records. But according to the search warrant application, the gambler first met Funke, the actor, in 2010, and paid him $8 million in gambling losses between 2012 and 2013.

The gambler swore it off. But three years later, he came back. Because he didn’t want to use his account with Funke, the gambler used a friend’s website login for Sand Island Sports — and ultimately racked up another seven-figure debt.

“Big Guy pay yet???” Kagasoff asked Funke, according to the search warrant application. Unfortunately for them, the gambler had by then figured out a different way to dispose of the debt — which is why federal agents were recording the bookies’ call.

IT’S UNCLEAR FROM COURT records how “Big Guy” wound up talking to the feds. But in September 2017, he told investigators he “was willing to cooperate with law enforcement on this investigation to avoid paying a gambling debt of approximately $6 million,” according to the search warrant application. He also “expressed an interest” in applying for a reward from the IRS for turning in tax scofflaws.

In May 2018, agents from the Department of Homeland Security obtained wiretaps on numbers connected to the Sand Island Sports operation. Agents then spent the better part of two years listening in on their conversations and conducting surveillance.

They watched Kagasoff deliver a reusable grocery bag, apparently full of cash, to Funke’s modernist Venice, Calif., home. Funke then headed to the bank in his Ford GT, a $150,000 sports car with license plates reading “Funk GT.”

When Nix visited a Newport Beach cafe, undercover agents squeezed in behind him, where they watched him chat about sports with the proprietor — and then hand off a bundle of cash, according to the search warrant application.

But the application also reveals the challenge of following the trail offshore. Federal agents didn’t have a Costa Rican address to investigate, just information from the website’s online registration that gave its location as “in front of Cemaco,” a department store in San Jose. And the American bookies had gotten more sly about shifting profits overseas, the application suggested: “I have been unable to identify how the proceeds are transferred to the owners of [Sand Island Sports] at this time,” a federal agent acknowledged.

In January 2020, the agents raided the homes of the American bookies. They handcuffed Funke before interviewing him in a sauna room in his backyard, records show. They had learned that Funke kept a drawer full of cash so others could pay off winning gamblers while he was away in Mykonos or Laos, and now agents pulled from his house $137,544, a money counter and ledgers.

Sixty miles south, they raided the home of Kagasoff, the second-generation bookie who, records show, once sent a text offering to increase the NBA betting limit of Carter, LeBron James’s business partner. At Kagasoff’s home, the feds found $525,509 in cash; dozens of guns, including an AR-15; and drugs including suspected cocaine and ecstasy, court records show. (Carter told investigators he didn’t know Kagasoff.)

Most of the bookies appeared ready to roll over. “Contact the prosecutor,” Funke’s attorney, Nathan Hochman, said in a court appearance, relaying his client’s response to the case. “Tell him that I want to come in right now.”

At least six investigative targets agreed to come clean with prosecutors, court records show. Then, in the summer of 2021, prosecutors and agents began interviewing dozens of people they called “non-target witnesses,” including the gamblers themselves. Some were with boldface names in sports. And prosecutors later claimed that some of those witnesses, including Carter and Pippen, were less than forthcoming.

But only one of those athlete witnesses ultimately wound up being prosecuted.

YASIEL PUIG’S STORY IS well known to baseball fans: He defected from Cuba under the thumb of Mexican gangsters, signed a $42 million deal with the Los Angeles Dodgers before ever setting foot on American soil, briefly lit up MLB and then, after the 2018 season, was traded to the Cincinnati Reds amid growing concerns about behavioral issues.

That’s when, according to court records, he met Donny Kadokawa.

Kadokawa had previously been the varsity baseball coach at California’s Palo Alto High, where he was not asked to coach again following complaints about his allegedly angry and profane coaching style. He then started Kado Baseball, a youth program in Hawaii where then-Dodgers Corey Seager, Joc Pederson and Cody Bellinger took part in instructional camps. He later opened the Dodgers Training Academy, a Hawaiian youth camp affiliated with the MLB team. (The Dodgers declined to comment.)

In January 2019, Puig joined Kadokawa at his baseball camp. Puig posted a video of himself racing around on a golf cart wearing one of Kadokawa’s T-shirts.

In later indictments, prosecutors referred to Kadokawa — without naming him — as an agent for Nix. His attorney declined to comment. But the meeting would prove expensive for Puig.

In May 2019, Puig texted Kadokawa instructions to place two bets involving the next day’s Golden State Warriors game, according to a copy of those messages obtained by The Post. The messages appear to show how Nix’s bookies lured in deep-pocketed gamblers: Puig only wired Kadokawa $40,000 but was permitted to wager $80,500.

Puig won one bet and lost the other, for a net deficit of $13,000 — and was off and running. By the following month, he had lost $282,900, according to a later indictment. To pay off the debt, Puig purchased two cashier’s checks for $100,000 and sent them via UPS to Joey Schottenstein, a billionaire’s son whom prosecutors have described, without naming him, as a “significant client” of the sportsbook.

Joey is the son of Jay Schottenstein, CEO of American Eagle Outfitters and chairman of DSW. Joey himself was on the board of Designer Brands and Green Growth Brands, positions that were central to the federal prosecution of his second cousin, who pleaded guilty this year to trading on insider information Joey gave him. Text messages filed as evidence in that case suggested that Joey Schottenstein was a regular in the high-roller lairs of Las Vegas.

As The Post previously reported, the Schottensteins are close with Maverick Carter and LeBron James. Joey and Jeffrey Schottenstein did not respond to requests for comment.

In July 2019, Nix texted Puig a username — “R182” — and an easily remembered password — “yp” — for the Sand Island Sports website. Over the next three months, Puig was traded to Cleveland and brawled and scuffled his way through what turned out to be his last season in MLB. During that time, Puig’s account was used to place 899 bets through the website, prosecutors said.

Federal agents and prosecutors asked Puig about all this in January 2022, three years after he placed his first bet. By then he had been chased from MLB by a host of issues, including multiple sexual assault allegations, which he has denied. Puig was preparing to play in South Korea. During the video interview with federal agents and prosecutors — including assistant U.S. attorney Jeff Mitchell, who has overseen the case for years — Puig was joined by two lawyers and an interpreter, according to a law enforcement summary of the interview.

Mitchell had assured Puig’s lawyer that Puig was not a target of the investigation. Still, an agent for Homeland Security Investigations read Puig the statute making it a crime to lie to a federal agent. Puig interrupted, according to the report, telling the federal agent to stop reading it because he was wasting Puig’s time. The agent finished reading the statute anyway.

When the investigators asked about Kadokawa, Puig initially said they had “not spoken about sports betting,” according to the report. But later in the interview, after speaking with his attorneys and reviewing his phone for texts, Puig acknowledged placing bets with Kadokawa.

Puig said he did not recognize the website Sand Island Sports. He claimed “an unknown person” had told him to mail the checks to Schottenstein, according to the report — when, in fact, Kadokawa had texted him the instructions.

After the interview, Puig shifted from witness to target. Records reviewed by The Post show that for months afterward, Kadokawa and an associate repeatedly messaged Puig attempting to learn what he had told investigators. “I no said nothing. I not talking,” Puig finally told them in a voice message reviewed by The Post. “I said that I only know [Kadokawa] from baseball.”

It wasn’t true; Puig had admitted he placed bets with Kadokawa. But prosecutors later cited it as an admission that he had lied to investigators. He was charged with making false statements and, while still in South Korea, agreed to plead guilty. But upon his return, he rescinded the plea, and prosecutors added a charge of obstruction of justice.

They charged Kadokawa with filing a false tax return. He pleaded guilty and has not yet been sentenced. Kadokawa’s role in the Nix operation has not been previously reported.

Puig’s attorney, Keri Axel, has cited Puig’s ADHD and the language barrier as factors adding to the confusion in the interview, which she called a “giant misunderstanding.”

“Puig never should have been charged,” Axel said in a statement.

EVEN AS HIS HOME was raided and his clients were interviewed by federal agents, Nix didn’t appear to alter his schedule. Amid the turmoil, he golfed in the members-only tournament at Michael Jordan’s club, where Jordan, a famously avid bettor, apparently “wants to play for more money than you can afford to lose.”

The following March, prosecutors unsealed indictments against Nix, Funke, Arsenian, Miller and Castelao, all of whom had already pleaded guilty to charges related to the gambling ring. Nix agreed to pay $1.25 million in back taxes and forfeit $1.3 million from seized bank accounts. The parent company of Sherman Oaks Check Cashing — favored by the bookies because, according to prosecutors, its tellers accepted $100 tips and didn’t report financial transactions — was also indicted on charges related to allegedly cashing at least $18 million in gambling proceeds. The company pleaded guilty and was fined $500,000.

In November 2023, Hiljus, the former MLB player, pleaded guilty to filing false tax returns. And this past summer, Eric Fulton, the Hollywood business manager who owned the house Nix lived in, pleaded guilty to lying to investigators. Fulton said he didn’t know Nix was in the gambling business, according to an indictment. In fact, he later admitted in a plea agreement, Fulton himself gambled with Sand Island Sports, including on one of his own athlete clients, and loaned Nix $1.25 million interest-free to help him pay off winners. He is awaiting sentencing and did not respond to requests for comment.

The sentencing dates for Nix and Arsenian have been repeatedly delayed. But for a six-year-old case involving wiretaps, surveillance and interviews with dozens of prominent clients, the punishment handed down so far has been relatively light. Kagasoff was sentenced to probation, along with the forfeiture of more than $3.2 million, including the cash seized from his home. Matt Funke was sentenced to probation — the terms of which did not prevent him from attending the BNP Paribas Open tennis tournament this past spring in a bathrobe — in addition to forfeited cash. Funke is building a high-end boutique hotel in Palm Springs, Calif., his attorney said at his sentencing. Howard Miller has not yet been sentenced but is under consideration for a diversion program.

Before Joe Castelao’s sentencing this summer, his attorney downplayed his role in Sand Island Sports, the website he had pleaded guilty to owning and operating. Castelao was simply “the owner of a URL” who was “paid per head” by those who used the site to gamble, his lawyer said.

Prosecutor Jeff Mitchell disagreed, arguing that “it was all run remotely by [Castelao] here in California.” Still, a judge sentenced Castelao to three months in custody and a $55,000 fine.

After The Post asked the Justice Department what became of the investigation into Daniel and Matthew Soto, a reporter received a call from George Braunstein, an attorney representing Daniel Soto. Braunstein said that Soto had been secretly indicted and pleaded guilty in connection with Sand Island Sports and that, following The Post’s inquiry, the court planned to unseal the case. Matthew Soto was not indicted, Braunstein said.

Though Braunstein confirmed that Soto still worked in gaming, he didn’t take bets, the lawyer claimed. But the three phone numbers that federal agents listed as belonging to Sand Island Sports in Costa Rica all appear to be in operation. A reporter recently called one and asked for Daniel Soto.

“Yes, sir — one second, let me transfer you,” the phone operator said.

The person who received the transfer would not confirm that he was Daniel Soto. In response to questions about the alleged gambling operation, he said: “No one here can help you with that information. I’m sorry.”

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