Five Men Sentenced in Tennessee Sports Betting Fraud Scheme

Five men have been handed prison sentences in Tennessee for their roles in a sports betting fraud scheme that used stolen identities, including bank account details, to profit from sportsbook bonus offers.

The scheme ran between 2022 and 2024, with prosecutors alleging that the men purchased personal information, including dates of birth, Social Security numbers, and bank account details, online.

This information was then used to open new sportsbook accounts, taking advantage of welcome bonus offers multiple times over. The men would then withdraw funds into bank accounts they controlled.

In addition to operating the scheme in Tennessee, they would travel to neighboring states to perpetrate the fraud.

The five men pled guilty to aggravated identity theft and unauthorized use of an access device, and were given the following sentences:

• Lucas Gilliam, 25, was sentenced to 36 months.
• LaVonte Holmes, 24, was sentenced to 30 months.
• Lawrence Williams, 22, was sentenced to 15 months.
• Nathan Penaflor, 23, was sentenced to 6 months.
• Joshua Penaflor, 22, was sentenced to 6 months. 

In a press release, U.S. Attorney D. Michael Dunavant said, “With new and ever-changing technology, applications, and platforms, criminals are using more creative and disturbing ways to commit fraud against vulnerable victims, including identity theft. For these thieves, their bets did not pay off, and were instead parlayed into prison sentences.”

Connecticut Warns Users Over Similar Scheme

In November last year, the Department of Consumer Protection, Gaming Division (DCP) in Connecticut, issued a warning to residents about a similar fraud scheme involving DraftKings accounts.

Prosecutors did not reveal which sportsbooks the Tennessee fraud scheme targeted. In Connecticut, fraudsters advertised that users could make money if they had a DraftKings account.

Individuals who responded to ads on TikTok and other social media platforms were then instructed to make deposits using stolen credit card details, before withdrawing funds to bank accounts controlled by the perpetrators of the scheme.

In the case in Tennessee, the five men paid for personal information and used this without the knowledge of the victims. In the Connecticut scheme, the orchestrators of the fraud would pay users to use their DraftKings accounts to siphon funds from stolen credit cards.

DCP Gaming Director Kris Gilman warned residents not to get involved in such schemes, emphasizing that anyone participating risks criminal prosecution. Gilman stated, “This is fraud, and a felony. The organizers of these schemes will promise you won’t get caught, but that’s clearly not true. Identity theft and computer crimes are traceable. The message is clear: do not participate in this scam.”

Tennessee Clamps Down on Unregulated Gambling

While the fraud scheme focused on using regulated sportsbooks, taking advantage of their bonus offers, Tennessee has been clamping down on alternative forms of gambling.

Enforcement action from the Tennessee Sports Wagering Council (SWC) and the state’s Attorney General, Jonathan Skrmetti, has led to many sweepstakes casinos exiting the state.

Similarly, Tennessee’s SWC has targeted prediction market platforms, claiming they operate illegal sports betting platforms. The regulator sent cease-and-desist letters to Kalshi, Polymarket, and Crypto.com last week.

In response, Kalshi filed a lawsuit against the organization, and a judge granted the company a temporary restraining order to allow it to continue operating in the state, while the case remains open.