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Diaz to serve 5 months for RSI role

The former vice president of Racing Services Inc. will serve time for his role in an illegal gambling operation, but not behind bars, U.S. District Court Judge Ralph Erickson ordered Friday.

The former vice president of Racing Services Inc. will serve time for his role in an illegal gambling operation, but not behind bars, U.S. District Court Judge Ralph Erickson ordered Friday.

Raymundo Diaz Jr., 39, was sentenced to 90 days in a halfway house, 60 days of electronic home monitoring and two years of probation after taking a plea agreement in the case.

Diaz also must do 100 hours of community service.

"This has been a most terrible experience in my life," Diaz said, his head lowered and voice trembling as he stood before the judge in Fargo's federal courthouse. "I am very remorseful for everything that has happened and the shame I've brought on my family, my friends and my children."

Prosecutors said Diaz's company, Global Contact Inc., leased a south Fargo office that housed an illegal betting parlor. The site handled $99 million in bets from October 2002 to April 28, 2003, when federal agents raided it.


About $6.5 million in taxes on the bets went unpaid, and a charity wasn't involved as required by state law.

In arguing for a lighter sentence, Diaz's attorney, Joseph Friedberg of Minneapolis, laid the blame on Racing Services president Susan Bala, owner of the now-defunct simulcast service provider. He said Bala gave too many rebates to bettors, leaving her short to pay taxes and a charity.

"He (Diaz) had no knowledge of the lack of agreement with the charities. He had no knowledge of the tax issues," he said. "If he had run this operation, that wouldn't have happened."

Diaz pleaded guilty Jan. 18 to one count each of conspiracy to conduct an illegal gambling business, conducting an illegal gambling business and transmission of wagering information, all felonies.

In exchange, prosecutors dropped nine counts of money laundering and money laundering conspiracy.

Diaz was under "overwhelming" pressure from Bala and his own family not to cooperate with the government, Friedberg said. He pointed out that Bala had hugged Diaz's mother right after Diaz pleaded guilty in the case, and that Bala was sitting with Diaz's father in the courtroom Friday.

"The family is still enamored with Ms. Bala. I don't happen to be," Friedberg said outside the courthouse.

"I still can't believe she came to this sentencing," he added.


Bala was convicted Feb. 4 on the same 12 felony counts faced by Diaz. The jury also made her personally responsible for $19.7 million of the $99 million RSI was ordered to forfeit.

Her sentencing is set for July 14.

"I think folks got the sense that there's another shoe to drop," U.S. Attorney Drew Wrigley said of Friday's hearing, "and we're looking forward to that opportunity at sentencing."

Lawyers from both sides said Diaz's sentencing was fair.

"It's not a slap on the wrist," Friedberg said, adding that Diaz won't be able to visit his children in Mexico for five months. A native of Mexico City, Diaz has dual citizenship in Mexico and the United States.

Prosecutors recommended Diaz serve five months in prison, or half the minimum of the 10 to 16 months called for under federal sentencing guidelines.

Assistant U.S. Attorney Keith Reisenauer said Diaz provided "substantial assistance" in the case. Diaz's testimony was important and reflected his knowledge of the illegal gambling operation through his business and personal relationships with Bala, he said.

"Ms. Bala was the president of the company, and she was in charge of everything that went on," he said.


Diaz also agreed to forfeit $100,000 and help recover proceeds from the illegal gambling business.

As part of the plea agreement, Diaz had to testify in the trial of Bala, his former boss and girlfriend.

Diaz testified at trial that he told Bala "at least a dozen times" about problems with betting software at the site that resulted in $99 million in bets being taken over the phone and going unreported to the state of North Dakota.

Diaz also testified he shared concerns with Bala a month before federal agents raided the site about state taxes not being paid.

"She told me she would take care of it," he said.

Diaz must report to the halfway house no later than 3 p.m. June 20.

Erickson sentenced Global Contact to pay a $60,000 fine, though Friedberg said it likely won't be paid.

The judge also ordered Diaz to liquidate the assets of Global Contact and apply the proceeds to his $100,000 forfeiture.


Diaz made only one comment to the press Friday, when asked whether he still had had a personal relationship with Bala.

"No, I don't," he said.

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