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Seeing Red on Black Friday: Poker Sites Indicted for Fraud, Money Laundering and Illegal Gambling
On Friday April 15th, the U.S. Department of Justice unsealed an indictment against the principals and others associated with three of the largest Internet poker sites (Pokerstars, Full Tilt Poker and Absolute Poker). Eleven defendants were charged with fraud, money laundering and illegal gambling offenses. A civil money laundering and forfeiture complaint was also filed against those sites and their payment processors.
Since the enactment of the Unlawful Internet Gambling Enforcement Act (“UIGEA”) in 2006, it has been illegal for gaming sites to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” Nonetheless, according to the indictment:
Because U.S. banks and credit card issuers were largely unwilling to process their payments, the Poker Companies allegedly used fraudulent methods to circumvent federal law and trick these institutions into processing payments on their behalf. For example...[Pokerstars, Full Tilt Poker and Absolute Poker] arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewellery and golf balls. Of the billions of dollars in payment transactions that the Poker Companies tricked U.S. banks into processing, approximately one-third or more of the funds went directly to the Poker Companies as revenue through the "rake" charged to players on almost every poker hand played online.
...to accomplish their fraud, the Poker Companies worked with an array of highly compensated "payment processors"...who obtained accounts at U.S. banks for the Poker Companies. The payment processors lied to banks about the nature of the financial transactions they were processing, and covered up those lies, by, among other things, creating phony corporations and websites to disguise payments to the Poker Companies.
The indictment and civil complaint seek over 3 billion dollars in money laundering penalties and forfeiture from the poker sites. The District Court has also issued an order restraining “approximately 76 bank accounts in 14 countries containing the proceeds of the charged offenses”. The United States has also seized the following domain names from the companies: PokerStars.com, FullTiltPoker.com, AbsolutePoker.com, Ub.com and Ultimatebet.com.
For a copy of the indictment, visit:
http://www.scribd.com/doc/53162301/53107543-Indictment-DOJ-vs-Scheinberg-Bitar-Tom-et-al
For additional information, visit:
http://news.cnet.com/8301-13578_3-20054433-38.html