In the most aggressive action yet to try to prevent Americans from gambling online, federal prosecutors on Friday charged three of the largest Internet poker companies with tricking banks into processing billions of dollars of illegal betting proceeds.
Eleven people, including the owners of Full Tilt Poker, Absolute Poker and PokerStars, were charged with violating U.S. anti-Internet gambling laws, under an indictment unsealed by federal prosecutors in Manhattan.
Prosecutors also filed civil money laundering charges seeking to recover at least $3 billion from the companies, are of which all based overseas, court documents said.
The Federal Bureau of Investigation also seized five Internet domain names used by the companies to host their games and obtained restraining orders against 75 bank accounts allegedly used by the companies and their payment processors.
“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 profits,” said Manhattan U.S. Attorney Preet Bharara. “… In their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that 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.
Representatives for the companies could not immediately be reached to comment on the charges.
News of the action sent waves of panic through news groups devoted to Internet poker and gambling, with many players despairing whether they would be able to recover money on deposit with the companies. Millions of U.S. players gambling online despite its dubious legality.
Former U.S. Sen. Alfonse D’Amato, now chairman of the Poker Players Alliance, which represents more than 1 million U.S. players, said in a statement that the organization was "shocked at the action taken by the U.S. Department of Justice today against online poker companies and will continue to fight for Americans’ right to participate in the game they enjoy. Online poker is not a crime and should not be treated as such."
Two of the defendants were arrested on Friday, one is expected to turn himself in to law enforcement and eight others are not currently in the United States, prosecutors said.
Arrested Friday were John Campos, vice chairman of the board and part owner of SunFirst Bank of Saint George, Utah, which allegedly processed gambling transactions for the companies, and Chad Elie, who worked as a “highly compensated payment processor,” according to the indictment.
Poker site operators Raymond Bitar, 39, and Nelson Burtnick of Full Tilt Poker; Isai Scheinberg, 64, and Paul Tate of PokerStars; and Brent Beckley, 31, and Scott Tom, 31, of Absolute Poker, were all charged with violating the 2006 Unlawful Internet Gambling Enforcement Act and other laws.
Payment processors Ryan Lang, Ira Rubin and Bradley Franzen also were named in the indictment.
The criminal charges outlined a scheme by the company owners and some of their employees to direct the gambling profits to online shell companies that would appear legitimate to banks processing payments.
The crackdown comes as some U.S. lawmakers have sought to pass legislation legalizing Internet gambling in hopes of tapping a massive new source of tax revenue.
The District of Columbia City Council approved a budget in 2010 to allow its lottery system to offer Internet poker to its residents. According to the Wall Street Journal, the window for Congress to stop the bill has likely been closed. Lawmakers in New Jersey also voted to make the state the nation’s first in-state Internet gambling market, but Gov. Chris Christie vetoed the measure last month.
U.S. businesses also have been exploring entering the online business.
In March, Wynn Resorts Ltd. said it had entered into a partnership with PokerStars, and that they would work for passage of U.S. legislation on Internet poker.