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DOJ indicts founders of three major U.S. online poker operators15 April 2011
In the indictment unsealed today, the DOJ seized five Internet domains and issued restraining orders against approximately 76 bank accounts in 14 countries. The DOJ is also seeking $3 billion in civil money laundering penalties in addition to the forfeiture of funds.
PokerStars founder Isai Scheinberg, who recently completed a deal with Wynn Resorts to create PokerStarsWynn.com when online poker is licensed and approved in the U.S., was among those indicted. Wynn has not released a statement on the indictment at this time.
Paul Tate, who allegedly led PokerStars payment processing department was indicted as well. Full Tilt founder Raymond Bitar and former processing chief Nelson Burtnick were also named in the indictment, as were Absolute Poker founders Scott Tom and Brent Beckley. Absolute Poker and Ultimate Bet are now owned by Blanca Games. According to the indictment, Burtnick also served as the head PokerStars payment processing unit at one time.
The DOJ indicted Ryan Lang, Ira Rubin, Bradley Franzen and Chad Elie, who operated as intermediaries between the poker companies and payment processors. for the poker companies. And John Campos, the vice chairman of the board and part owner of SunFirst Bank, was charged for his role in the process.
Campos was arrested this morning in Las Vegas while Elie was arrested in Utah, according to the DOJ.
The DOJ says the other defendants are not in the U.S. and that it is working with Interpol secure their arrests.
Visitors to Absolute Poker, PokerStars and Full Tilt are greeted with a message beginning with "This domain name has been seized by the F.B.I. pursuant to an Arrest Warrant in Rem obtained by the United States Attorney's Office for the Southern District of New York."
Both PokerStars and Full Tilt have indicated they will not be accepting play from the United States.
PokerStars players on the popular poker forum TwoPlusTwo have indicated that they are unable to play today. According to a screen grab posted by one player when he tried to register for a tournament, PokerStars is telling players "We are sorry but, due to government regulations, playing real money ring games is not allowed in your area."
In a statement issued today, U.S. Attorney Preet Bharara from the Southern District of New York made it clear he believed PokerStars, Full Tilt and Absolute Poker had earned the indictments.
"As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits," Bharara said. "More over, as we allege, in their zeal to circumvent the gambling law, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don't like simply because they can't bear to be parted from their profits."
The most elaborate scheme to circumvent the UIGEA, which makes it illegal for financial institutions to process unlawful gambling transactions, involved Elie and Campos.
According to the indictment, Elie and some others approached Campos, who is part-owner of SunFirst Bank, about processing online 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," the indictment reads. "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."
"The vast majority of the charges pertain to bank fraud," said Buffalo State business law professor Joe Kelly after reading the 52-page indictment.
"I don't think it's a violation of the UIGEA or illegal gambling business laws," Kelley added. "In order for it to be a violation of the illegal gambling business law, you have to prove poker violates New York state law."
Friday's major developments also affected recent partnerships PokerStars and Full Tilt made with land-based operators. Wynn Resorts, who reached an agreement with PokerStars late last month to jointly-operate an online poker room should the practice be regulated and legalized, said in a statement it was pulling out of the deal.
"Wynn Resorts, Limited announced today that it terminated its alliance with PokerStars, the online poker company. The decision was reached as a result of the indictment unsealed by the U.S. Attorney for the Southern District of New York," the statement read.
Ferttita Interactive, which reach a similar agreement with Full Tilt, also said it was ending its affiliation with the online poker room.
DOJ indicts founders of three major U.S. online poker operators is republished from Online.CasinoCity.com.
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