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Internet Gambling Sites Charged In Fraud Scheme

April 16, 2011

Eleven people from three online gambling sites were charged Friday with bank fraud, money laundering, illegal gambling and other offenses in an indictment by the US attorney for the southern district of New York.

The owners of PokerStars, Full Tilt Poker and Absolute Poker, three of the largest Internet poker companies in the US, were accused of tricking regulators and banks into processing billions of dollars of illegal gambling proceeds.

In addition to the charges, restraining orders were also issued against 76 bank accounts in 14 countries used by the illegal firms and their payment processors. Five Internet domain names used by the companies were also seized and shutdown by authorities, who filed a complaint seeking $3 billion in penalties and forfeiture from the poker companies.

Two of the men were taken into custody on Friday, one is expected to turn himself in and eight others are not in the country, according to prosecutors.

Raymond Bitar of Full Tilt Poker and Isai Scheinberg of PokerStars were charged with violating the Unlawful Internet Gambling Enforcement Act and other laws. Absolute Poker owners Brent Beckley and Scott Tom faced similar charges.

“These defendants, knowing full well that their business with US customers and US banks was illegal, tried to stack the deck,” FBI assistant director Janice Fedarcyk told AFP in a statement.

“They lied to banks about the true nature of their business,” she said. “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,” she added.

Online poker remains a multi-billion-dollar industry despite being illegal in the US since 2006. Companies use a variety of ways to bypass the law, which includes locating their operations offshore.

The indictment charged the companies with arranging for money received from US gamblers to be disguised as payments to non-existent websites that supposedly sold merchandise. The indictment also said the poker companies tricked some US banks into processing payments, but some banks were conspirators in the scheme to bypass US laws that make it illegal to handle gambling proceeds.

Among banks that were included in the indictment, was SunFirst Bank, a small private bank in Saint George, Utah. Bank co-owner John Campos was arrested for his agreement to process online poker transactions.

If convicted, the defendants could face up to five years in prison for illegal Internet gambling, 20 years for money laundering and 30 years for bank fraud.

The US ban on Internet gambling has been challenged as an unfair trade restriction at the World Trade Organization.

In March, Wynn Resorts Ltd said it had entered into a partnership with PokerStars, and was working to pass US legislation on Internet gambling.

U.S. lawmakers have in the past tried to pass legislation legalizing Internet gambling in the hope of reaping billions in tax revenue.

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