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US Attorney, Internet Poker companies indictment, press release

US Attorney, Internet Poker companies indictment, press release

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Published by Exit Exit
The US Attorney's Office press release announcing the charges that the founders of 3 major online poker companies now face.
The US Attorney's Office press release announcing the charges that the founders of 3 major online poker companies now face.

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Published by: Exit Exit on Apr 15, 2011
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United States Attorney Southern District of New York 
Multi-Billion Dollar Civil Money Laundering And Forfeiture Action Also Filed Internet Domain Names Used By The Poker Companies Seized 
PREET BHARARA, the United States Attorney for theSouthern District of New York, and JANICE FEDARCYK, theAssistant-Director-in-Charge of the New York Field Office of theFederal Bureau of Investigation ("FBI"), announced the unsealingof an Indictment today charging eleven defendants, including thefounders of the three largest Internet poker companies doingbusiness in the United States - PokerStars, Full Tilt Poker, andAbsolute Poker (the "Poker Companies")- with bank fraud, moneylaundering, and illegal gambling offenses. The United Statesalso filed a civil money laundering and in rem forfeiturecomplaint (the "Civil Complaint") against the Poker Companies,their assets, and the assets of several payment processors forthe Poker Companies. In addition, restraining orders were issuedagainst more than 75 bank accounts utilized by the PokerCompanies and their payment processors, and five Internet domainnames used by the Poker Companies to host their illegal pokergames were seized.Manhattan U.S. Attorney PREET BHARARA said: "Ascharged, these defendants concocted an elaborate criminal fraudscheme, alternately tricking some U.S. banks and effectivelybribing others to assure the continued flow of billions inillegal gambling profits. Moreover, as we allege, in their zeal
to circumvent the gambling laws, the defendants also engaged inmassive money laundering and bank fraud. Foreign firms thatchoose to operate in the United States are not free to flout thelaws they don’t like simply because they can’t bear to be partedfrom their profits."FBI Assistant Director-in-Charge JANICE K. FEDARCYKsaid: "These defendants, knowing full well that their businesswith U.S. customers and U.S. banks was illegal, tried to stackthe deck. They lied to banks about the true nature of theirbusiness. Then, some of the defendants found banks willing toflout the law for a fee. The defendants bet the house that theycould continue their scheme, and they lost."According to the Indictment and the Civil Complaintunsealed today:On October 13, 2006, the United States enacted theUnlawful Internet Gambling Enforcement Act ("UIGEA"), making it afederal crime for gambling businesses to "knowingly accept" mostforms of payment "in connection with the participation of anotherperson in unlawful Internet gambling." Despite the passage ofUIGEA, the Poker Companies, located offshore, continued operatingin the United States. In a press release dated October 16, 2006,Absolute Poker announced that the company would continue its U.S.operations because "the U.S. Congress has no control over" thecompany’s payment transactions.Because U.S. banks and credit card issuers were largelyunwilling to process their payments, the Poker Companiesallegedly used fraudulent methods to circumvent federal law andtrick these institutions into processing payments on theirbehalf. For example, defendants ISAI SCHEINBERG and PAUL TATE ofPokerStars, RAYMOND BITAR and NELSON BURTNICK of Full Tilt Poker,and SCOTT TOM and BRENT BECKLEY of Absolute Poker, arranged forthe money received from U.S. gamblers to be disguised as paymentsto hundreds of non-existent online merchants purporting to sellmerchandise such as jewelry and golf balls. Of the billions ofdollars in payment transactions that the Poker Companies trickedU.S. banks into processing, approximately one-third or more ofthe funds went directly to the Poker Companies as revenue throughthe "rake" charged to players on almost every poker hand playedonline.As alleged in the Indictment, to accomplish theirfraud, the Poker Companies worked with an array of highlycompensated "payment processors" – including defendants RYANLANG, IRA RUBIN, BRADLEY FRANZEN, and CHAD ELIE – who obtained-2-
accounts at U. S. banks for the Poker Companies. The paymentprocessors lied to banks about the nature of the financialtransactions they were processing, and covered up those lies, by,among other things, creating phony corporations and websites todisguise payments to the Poker Companies. For example, aPokerStars document from May 2009 acknowledged that they receivedmoney from U.S. gamblers through company names that "stronglyimply the transaction has nothing to do with PokerStars," andthat PokerStars used whatever company names "the processor canget approved by the bank."By late 2009, after U.S. banks and financialinstitutions detected and shut down multiple fraudulent bankaccounts used by the Poker Companies, SCHEINBERG and BITARdeveloped a new processing strategy that would not involve lyingto banks. PokerStars, FullTilt Poker, and their paymentprocessors persuaded the principals of a few small, local banksfacing financial difficulties to engage in such processing inreturn for multi-million dollar investments in the banks. Forexample, in September 2009, ELIE and others approached defendantJOHN CAMPOS, the Vice Chairman of the Board and part-owner ofSunFirst Bank, a small, private bank based in Saint George, Utah,about processing Internet poker transactions. While expressing"trepidations," CAMPOS allegedly agreed to process gamblingtransactions in return for a $10 million investment in SunFirstby ELIE and an associate, which would give them a more than 30%ownership stake in the bank. CAMPOS also requested and receiveda $20,000 "bonus" for his assistance. In an e-mail, one ofELIE’s associates boasted that they had "purchased" SunFirst andthat they "were looking to purchase" "a grand total of 3 or 4banks" to process payments.The Indictment and Civil Complaint seek at least $3billion in civil money laundering penalties and forfeiture fromthe Poker Companies and the defendants. The District Courtissued an order restraining approximately 76 bank accounts in 14countries 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 Internetdomain names used by the Poker Companies to operate their illegalonline businesses in the United States.* * *Defendants CAMPOS and ELIE were arrested this morningin Saint George, Utah and Las Vegas, Nevada, respectively. ELIEwill appear later today before a U. S. Magistrate Court Judge inLas Vegas, Nevada. CAMPOS will appear before a U.S. Magistrate-3-

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