More than rice and beans or bread and butter, no combination has been as popular in Brazil this year as celebrities, ostentation, unrepentant behavior and questionable sectors where money circulates. The connection between these elements became clear in September 2024 following the arrest order for singer Gusttavo Lima, who was suspected of being involved in a gigantic money laundering scheme through online games. Operation Integration — so named in reference to the “integration” stage of money laundering, where dirty funds are reintroduced into the formal economy to become legitimate — previously arrested social media influencer Deolane Bezerra early in the month.

The courts of the northeastern Pernambuco state have seized the assets of various celebrity targets, including private planes and luxury vehicles. They have also blocked their financial assets, amounting to over three billion reais (approximately $600 million).

If the estimates of international studies and reports are confirmed, this is just the tip of the iceberg. Groups like the Financial Action Task Force (FATF) and the United Nations estimate that 2%–5% of the global Gross Domestic Product (GDP) comes from activities that attempt to legitimize illegal money. When applied to Brazil, the money laundered annually varies between 200 billion and 500 billion reais (over $35 billion and $88 billion, respectively). The rest of the report paints a picture of the rest of the iceberg — the laundromat called Brazil.

The Brazilian bookie boom

The greed for easy, exorbitant profits found fertile ground in Brazil around 2018, when there was an explosion of bookies for gambling. Up until then, the Council for the Control of Financial Activities (COAF) — the body responsible for preventing and combating money laundering and terrorist financing — received around one million tips from institutions about suspicious operations. This number rose to 3.6 million in 2019 and hit a record high last year, at 7.6 million. The institution, which produced 3,178 financial intelligence reports (RIFs) a decade ago, quintupled that number in 2023, with 16,411 RIFs.

Starting in 2025, the government will enforce a requirement that fixed-odds betting sites operating in the Brazilian market have a checking mechanism. The goal is to prevent the space from being used for financial crime.

The explosive combination of greed and betting sites stems from the fact that bets have almost qualified for the money laundering practices manual. The sites allow or facilitate frequent, fractionated deposits and withdrawals, which make it more difficult to trace the origin of funds; the use of false identities, which allows fraudsters to create multiple accounts and, above all, cryptocurrencies as payment, which guarantee anonymity. The complexity and high number of possible betting methods coupled with the huge volume of financial transactions makes it easy to reinsert dirty funds into the formal market.

“I’m sure that more than half of the profits from illegal gambling take the route of digitalizing bets,” said an anonymous IT executive who specializes in financial transactions.

The key figures in the web of legal and illegal gambling relationships and the main method of Brazilian money laundering are not Bezerra or Lima. Rather, two men, a father and son sharing the name Darwin Henrique da Silva Filho, led the seizure that triggered Operation Integration. In December 2022, police collected 180,000 reais (nearly $32,000) from the headquarters of da Silva’s father’s company, Caminho da Sorte, in Pernambuco’s capital city of Recife. Since 1999, this company has been the biggest name in the illegal gambling game, jogo do bicho (“animal game”), in Recife. Along with the money, police collected a notebook containing, according to the police report, “daily notes of bets and prizes paid out from the game of bicho and soccer, betting slips with the letterhead of the Caminho da Sorte and Esportes da Sorte stalls, accounts from some physical stores.” This “demonstrates the umbilical relationship between the two types of activity classified as criminal contraventions.”

The investigation also points to the digitalization of Brazilian financial laundries — in this case, Filho, who was arrested in the same operation as Bezerra. His father comes from a time when the most common operation among fraudsters was the use of front companies, or companies posing as part of Brazil’s massive orange industry, to launder money raised through illegal means. Many bicheiros — operators who run jogo do bicho games — and owners of slot machines, bingos and illegal casinos used this tactic.

The trick was for them to become serial entrepreneurs, with several corporations operating regularly and a few trading companies with astronomically unrealistic turnover compared to the number of employees or services provided. If a tax audit were to be carried out, the business owner would have his seven or eight regular companies to show to make up for his own smoothness in “business,” and any connection with a dubious one. Filho, for example, has seven companies registered in his name. One of them is Esportes da Sorte, a bookie opened in 2018 and based in the Caribbean tax haven of Curaçao.

Legal loopholes

Curaçao, along with Malta, is home to the vast majority of bookies. They remain the destination for most of the money from the Brazilian criminal market. Since the days when bicheiros and slot machine owners wore flashy gold chains under patterned, open-chested shirts, these have been the preferred locations for money laundering. That’s why the businesses which have passed down through the generations have always maintained legal bodies on the tax islands.

Lawyers with knowledge of all the minutiae and loopholes in local legislation had their paths mapped out when bookies opened their headquarters in the localities, through which the proceeds of illicit activities could enter Brazil. “Outside Brazil, the financial systems are more rigid and nullify these paths,” the IT executive said.

They began by following the path indicated by the central banks of the countries where bets are placed, such as Brazil. With the consolidation of a digital betting company, the counterfeit money is converted to digital with the purchase of cryptocurrencies on an exchange, which is the platform for buying, selling, trading and storing virtual money.

The money is generally bought from one of Brazil’s dozens of exchanges that operate on the fringes of regulation — only 14 are legal here. The money travels untraceably to the tax haven where it is traded and becomes legal tender. “I’d guess that around 80% of the bets have a bicheiro behind them. The ones that don’t are the ones established abroad before coming here, like Bet365, Betano and 1XBet,” the IT executive stated.

This illegal market is extremely lucrative. It’s worth an estimated 10 billion reais (over $1.7 billion) a year, occupied by around 60% slot machines, 35% gambling and the rest between bingos and casinos.

As for the other major loophole in digital legislation, crash games such as Aviator and Tigrinho — which have players bet on a multiplier value that rapidly increases until the game crashes — account for half of the online casino network and an estimated 35 billion reais (approximately $6.1 billion) in annual revenue. The operators export the technology here and import the profits. The owners of the brand offer white label use; interested parties register their own domain, use the game code and offer it to the public in exchange for sharing the revenue with the creators.

In order to operate by receiving deposits in pixels, interested parties must set up an account with a fintech or financial agent that accepts them. Thus, the fiscal responsibility falls on them and the brand can simply wash its hands of it, claiming no involvement with the practice. Despite this, crash games were legalized in Brazil in 2023 and are currently being implemented by bookies.

Bezerra and Lima’s cases

This affiliate system is similar to the one that recently splashed across the media with Bezerra and then Lima’s faces. Celebrities who convey an image of integrity are sought out by betting companies, offering to share profits based on the number of punters they attract. The same tactic has been used by other fraudsters in the government’s opening to digital betting companies interested in operating legally in the country from 2025.

One of the 113 that agreed to pay 30 million reais (over $5.2 million) to obtain a license is Zeroumbet, owned by Bezerra. It placed the deposit on August 20 with the intention of operating legitimately. A careful look at the list reveals several other common names in slot machines and bingo parlors, simply to give a veneer of legality to the dubious activities of their investors.

Another much more eye-catching way of reintegrating dirty money into the formal market is through the acquisition and sale of luxury goods. This is how the connection between Bezerra and Filho was presented in the media. The influencer bought a Lamborghini Urus from the businessman for 3.85 million reais (over $675,000), paid cash and raised suspicions of “laundering money from gambling and sports betting.” The courts ordered that 34 million reais (over $5.9 million) be blocked from her bank accounts. Bezerra declared that she earns 1.5 million reais (over $263,000) per month.

In the case of Lima, Judge Andrea Calado da Cruz, who ordered his arrest, states that he gave “harbored fugitives” — José André da Rocha Neto and his wife, Aislla Rocha — during a trip from the city of Goiânia, Brazil to Greece on the singer’s private plane. This couple was investigated in the operation for being partners to lead bookie Vai de Bet. As heir to the real estate business, André has more than 30 companies to his name.

“It is imperative to point out that Nivaldo Batista Lima [Gusttavo Lima’s real name], by harboring fugitives, shows an alarming lack of consideration for justice. His intense financial relationship with these individuals, which includes suspicious transactions, raises serious questions about his own participation in criminal activities. His company’s connection to the money laundering network suggests a commitment that cannot be ignored,” the judge added.

The police also seized an airplane that belonged to Lima’s company, Balada Eventos e Produções. The singer’s lawyer said the aircraft had been sold to another company owned by Vai de Bet, but the National Civil Aviation Agency claims Lima is still the owner. The bookie even sponsored Sport Club Corinthians Paulista in a now-broken contract, worth 360 million reais (over $63 million), for three seasons and support for Buteco, Brazil’s biggest country music festival. Through companies Balada Eventos e Produções Ltda. and GSA Empreendimentos e Participações Ltda, the artist has received around 49.4 million reais (over $8.7 million) since last year from Vai de Bet and Filho’s Esportes da Sorte. His involvement doesn’t seem to be ending, as the singer acquired 25% of the latter on June 1.

A few hours before his (now ended) arrest on September 22, Lima appeared at Rock in Rio posing for photos with the music festival’s creator, Roberto Medina. Before the decision was published, he traveled to Miami, Florida with his wife, where he owns property worth 65 million reais (over $11.3 million). From there, he phoned controversial São Paulo mayoral candidate Pablo Marçal, who reassured fans that his friend “is fine.”

“Regardless of their financial condition, no one can evade justice … Wealth should not serve as a shield for impunity, nor as a means of escaping legal responsibilities. The application of the law must be equitable, ensuring that everyone, regardless of their social or economic position, is accountable for their actions. The attempt to escape legal consequences through financial connections is an affront to the fundamental principles of the rule of law and to the very notion of justice,” the judge of Recife’s 12th Criminal Court concludes. Here’s a tip for punters.

[Lee Thompson-Kolar edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.