BUSINESS

More bank accounts seized in US war on online poker eCom

TAGs: Department of Justice, Full Tilt, payment processing

Much of the online gambling world may have slowed its pace last week, distracted by all the last minute running around associated with the holidays. But the US Department of Justice wasn’t slowing down, as it had a little last minute shopping of its own left to do. High on the DoJ’s shopping list was the seizure of more accounts related to payment processor Allied Systems Inc.

A Michigan Poker Forum member posted the following message last week: In a letter dated Friday and faxed to Alliance Bank, the prosecutor said accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture “because they constitute property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Arlo Devlin-Brown, assistant U.S. attorney for the Southern District of New York (SDNY).

Poker news, Inner war at Poker eComThis is not Allied Systems first run-in with the DoJ, the company (and its various offshoots) having surrendered $13.5m to the Feds back in August. Having successfully tugged that thread loose, the DOJ appears intent on unraveling Allied’s whole garment. Allied’s business was strongly linked with PokerStars, although a spokesman from the poker company took pains in August to express that it didn’t “condone efforts by processors to conceal the nature or purpose of funds used to play online poker.”

This is also not Assistant US Attorney Arlo Devlin-Brown’s first scuffle with online gambling. He was in charge of the prosecution of Canadian payment processor figure Douglas Rennick, who in September of this year was sentenced to six months probation, despite facing a potential 55-year sentence on charges of bank fraud and money laundering via his company Account Services (et al).

Devlin-Brown also oversaw the case of former payment processing exec Daniel Tzvetkoff, who, like Rennick, received curiously lenient treatment from the courts. Tzvetkoff’s now defunct firm Intabill handled payments for (among other companies) Full Tilt Poker, although the relationship ended acrimoniously, with Full Tilt suing Tzvetkoff over millions in missing funds.

In the spring of 2010, rumors began circulating that the SDNY (Devlin-Brown’s home base) was preparing indictments against Full Tilt principals Chris Ferguson and Howard Lederer. In September, rumors swirled that former Full Tilt employee Jason Newitt had been served with a subpoena by the SDNY. Clearly, the other shoe has yet to drop here, so watch this space…

The main takeaway from all this is that pure poker companies (not just Stars and Tilt, but smaller networks as well) remain the current focus of anti-online gambling prosecutions in the US. Based on the activities of the past two years, the DoJ views eCom as these companies’ jugular veins, and has press-ganged former eCom insiders into assisting these attacks. It’s unfortunate that US poker players are having their winnings hijacked like this while the funds are in transit back to their personal accounts, but there you have it.

The situation isn’t entirely doom and gloom, however. New Jersey looks like it’s about to legalize intrastate online gaming early in the new year, and once its system is up and running (and people realize that heaven has not fallen), other states will be keen to follow New Jersey’s lead. As acceptance of online gaming becomes more widespread, it will become tougher for the DoJ to maintain its hardline stance against online poker companies.

That said, anyone who maintains that any international gaming company that ever served US customers would be granted a US gaming license… Well, let’s just say they should have asked their Secret Santa to give them a brain this Christmas.

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com