FARGO - The former president of North Dakota's simulcast horse-betting company has pleaded not guilty to charges that she ran an illegal off-track betting site. In court affidavits, prosecutors said the site catered to such high-rolling gamblers as a New York racing group and a man known as "New York Billy."

Susan Bala, who founded Racing Services Inc., has been charged with 12 felony counts, including money laundering and conspiracy to conduct an illegal gambling business. Also charged were Racing Services itself, Raymundo Diaz Jr., a vice president of RSI; and Global Contact Inc., a company Diaz owns.

"Although the defendants knew that their site was unlicensed, that their tellers were unlicensed, and that there was no charity involved as required by law, they attracted large numbers of bettors," to the site, U.S. Attorney Drew Wrigley said Thursday at a news conference.

The defendants are accused of running an unlicensed site that took in $99 million in bets in seven months.

Bala and Diaz pleaded not guilty in court Thursday. Attorneys entered similar pleas on behalf of the two companies. Magistrate Karen Klein set trial for Feb. 23.

Mark Beauchene and Dennis Fisher, the lawyers for Bala and Diaz, are seeking to have the charges dismissed, saying their clients made mistakes but committed no crimes. Klein did not rule on the dismissal motion Thursday.

The four defendants also were charged in state court Thursday with one felony count each of illegal gambling.

"There's overlapping issues, but I really feel that because my office is in charge of regulating the gaming industry … I think it's important I send word from a state official that this won't be tolerated," Attorney General Wayne Stenehjem said.

"This is a major issue because it's $99 million in unreported wagering," he said.

An affidavit filed by FBI agent John Dalziel on April 29, which contained interviews with two RSI employees, reveals what prosecutors call a "stealth site."

Michael Cichy, the company's simulcast coordinator, told Dalziel that a group of high stakes gamblers approached Bala in 1996 about betting with RSI. All of them were Americans, Cichy said in court documents, except for one individual from Great Britain who went by the name of "The Brit."

Cichy said he first learned about the site in last December, after betting parlors called RSI to ask about a downed cable used for simulcasting races. One of the calls came from a site that Cichy said he did not know about.

People came to RSI in the fall of last year for training to be tellers or bet takers, Cichy said, but none of them went to work at any of the established sites.

Cichy said he approached Diaz in January this year about the site, and said Diaz became "mush mouthed" and never offered an explanation.

Larry Trickel, a tote manager and race day coordinator at RSI, told Dalziel that the site had seven betting machines on the upper level and six on the lower level, the court documents say. He said 15 players typically wagered on the lower level, including one individual who was known as "New York Billy."

Trickel said about 45 players usually bet on the upper level. He identified them as the "NYRA" group, which stands for New York Racing Association, the court documents say.

Trickel said at one point Bala came to him "in a state of panic" and asked that the betting machines be moved over to RSI headquarters.

The indictment says $99 million was wagered at the unlicensed betting site between Oct. 1, 2002, and April 28, 2003, resulting in $19.7 million in revenues once winning bets had been paid. Authorities raided the location on April 28 and seized its equipment.

Almost $12.8 million in rebates were paid to high-rolling gamblers, and disguised as site expenses on statements of an entity called "Brixcorp," the indictment says.

"Those types of rebates are legal in North Dakota," Wrigley said. "We're not alleging that in itself is illegal conduct. We're alleging as part of our money laundering charges that it's part of them … using illegal gambling proceeds to keep the enterprise going.

"This is just a way that they sort of feed the beast," he said.

The operation also paid almost $6.1 million in expenses, the indictment alleges. It implies the operation made more than $800,000 in profit during the seven months.

Of the $99 million wagered, about $80 million was returned to winners, Wrigley said.

North Dakota allows charities and nonprofit organizations to run off-track betting shops, where gamblers may watch televised races and place wagers. RSI, the only licensed simulcast service provider in the state, provides services to those charities, including broadcast signals from horse tracks, and runs the North Dakota betting pool. The charities collect bets and pay off winning horseplayers.

Bala stepped down last month as president of Racing Services' parent company, RSI Holdings, and as chief executive officer of the Fargo business.

The company was put into receivership in August after state officials found it underreported wagers and had failed to pay at least $6.5 million in back taxes. About $1.5 million of that has been paid back to the state, Beauchene and Fisher said.