May 24, 2011

Head Of Online Poker Company Pleads Guilty To Fraud

The President of a Costa Rica-based online poker company pleaded guilty on Monday to illegally processing payments for Internet poker firms.

Preet Bharara, the U.S. attorney for the Southern District of New York, said in a statement that Bradley Franzen pleaded guilty in a Manhattan court to bank fraud, money laundering and illegal gambling offenses.

Franzen was one of 11 people charged last month in an investigation on the three largest online poker companies operating in the U.S.

Franzen is the first to enter a guilty plea.

As part of the investigation, 10 Internet sites were seized under a court order, including Bookmaker.com and Truepoker.com.  Eleven bank accounts were also seized in the U.S., Guam, Panama, Malta, Portugal and the Netherlands.

U.S. law prohibits banks and other financial institutions from knowingly accepting payments for online gambling made through credit cards, electronic funds transfers and checks.

"I was aware that most U.S. banks did not process the payments ... and I understood U.S. law prohibits it," Franzen said during his plea.

Franzen and other defendants were accused of helping to process billions of dollars for PokerStars, Full Tilt Poker and Absolute Poker by creating phony corporations and websites. 

U.S. authorities said Franzen arranged for gambling funds to be disguised as payments to a fictitious business called "Green2YourGreen," which claimed to sell environmentally-friendly household products.

He now faces a maximum sentence of 30 years in prison, although his sentencing date has not yet been set.

Online poker is a multi-billion-dollar industry in the U.S., although it has been illegal since 2006.

The ban on Internet gambling has been challenged as an unfair trade restriction at the World Trade Organization and some U.S. lawmakers are seeking to have online gambling legalized.