Just when you thought things were looking up for online gambling in the United States; the justice department and the FBI has come forward with some scathing allegations and indictments against some major players in the online poker industry.
In a press release from the Justice Department and the United States Attorney Southern District of New York, the names of the founders of PokerStars, Full Tilt and Absolute Poker were named in a large scale indictment.
Specifically taken from the release:
“Southern District of New York, and Janice Fedarcyk, the Assistant-Director-in-Charge of the New York Field Office of the FBI announced the indictment today charging eleven defendants, including the founders of the three largest Internet poker companies doing business in the United States – PokerStars, Full Tilt Poker, and Absolute Poker (the “Poker Companies”)- with bank fraud, money laundering, and illegal gambling offenses.”
According to the release, the United States also filed a civil money laundering and in rem forfeiture complaint (the “Civil Complaint”) against the Poker Companies, their assets, and the assets of several payment processors for the Poker Companies. Restraining orders were issued against more than 75 bank accounts utilized by the Poker Companies and their payment processors, and five Internet domain names used by the Poker Companies to host their poker games were seized.
The release goes into detail, and outlines the stages of the investigation:
“As alleged in the Indictment, to accomplish their fraud, the Poker Companies worked with an array of highly compensated “payment processors” – including defendants RYAN LANG, IRA RUBIN, BRADLEY FRANZEN, and CHAD ELIE institutions detected and shut down multiple fraudulent bank accounts used by the Poker Companies, SCHEINBERG and BITAR developed a new processing strategy that would not involve lying to banks.”
According to the release, allegedly, “PokerStars, FullTilt Poker, and their payment processors persuaded the principals of a few small, local banks facing financial difficulties to engage in such processing in return for multi-million dollar investments in the banks.”
The release cites the following example:
“September 2009, ELIE and others approached defendant JOHN CAMPOS, the Vice Chairman of the Board and part-owner of SunFirst Bank, a small, private bank based in Saint George, Utah, about processing Internet poker transactions. While expressing “trepidations,” CAMPOS allegedly agreed to process gambling transactions in return for a $10 million investment in SunFirst by ELIE and an associate, which would give them a more than 30% ownership stake in the bank. CAMPOS also requested and received a $20,000 “bonus” for his assistance. In an e-mail, one of ELIE’s associates boasted that they had “purchased” SunFirst and that they “were looking to purchase” “a grand total of 3 or 4 banks” to process payments.”
All of this comes with a heavy price tag. According to the release:
“The Indictment and Civil Complaint seek at least $3 billion in civil money laundering penalties and forfeiture from the Poker Companies and the defendants. The District Court issued an order restraining approximately 76 bank accounts in 14 countries containing the proceeds of the charged offenses. Pursuant to a warrant for arrest in rem issued by the U.S. District Court, the United States also seized five Internet domain names used by the Poker Companies to operate their illegal online businesses in the United States.”
FBI Assistant Director-in-Charge Janice Fedarcyk said in the press release:
“These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”
According to the release, arrests have already been made and more are pending:
“Defendants CAMPOS and ELIE were arrested this morning in Saint George, Utah and Las Vegas, Nevada, respectively. ELIE will appear later today before a U. S. Magistrate Court Judge in Las Vegas, Nevada. CAMPOS will appear before a U.S. Magistrate Court Judge in Saint George, Utah on April 18, 2011. Defendant FRANZEN is expected to appear for his arraignment on April 19, 2011 in the Southern District of New York. Defendants BITAR, SCHEINBERG, BURTNICK, TATE, TOM, BECKLEY, RUBIN and LANG are not presently in the United States and have not yet been arrested.”
“The U.S. Attorney’s Office for the Southern District of New York is working with foreign law enforcement agencies and Interpol to secure the arrest of these defendants and the seizure of criminal proceeds located abroad. BITAR, TOM, RUBIN, BECKLEY, CAMPOS, ELIE, and FRANZEN are U. S. citizens.”
Stay tuned for more coverage and analysis on this breaking news as we will be following this story in its entirety very closely.
