Friday morning an indictment against the founders of the three largest online poker sites was unveiled by federal authorities. According to the indictment, the founders of PokerStars, Full Tilt Poker, and Absolute Poker have been brought on charges of bank fraud, money laundering, and illegal gambling according to an article on MarketWatch. Restraining orders have also been issued on more than 75 bank accounts used by the online poker companies and their payment processors, as well as five Internet domain names.
Players on the PokerStars client registering for a tournament are currently being met with the message: "We are sorry but, due to government regulations, playing real money tournaments is not allowed in your area and are unable to play in Tournaments, sit at cash games, or transfer money at this time."
In a PDF of the indictment, The United States Department of Justice named 11 defendants, 7 of which show their citizenship in the U.S, 3 in Canada, and 1 was unnamed but resides on The Isle of Man. The U.S. Citizens are listed as Raymond Bitar (age 39), Scott Tom (31), Brent Beckley (31), Bradley Franzen (41), Ira Rubin (52), Chad Elie (31), and John Campos (57). The 3 Canadian citizens are Nelson Burtnick (40), Ryan Lang (36), and Isai Scheinberg (64 est.), who also holds duel citizenship with Isreal. The last named defendant is Paul Tate, whose citizenship and age was unlisted.
The charges include Conspiracy to Violate the Unlawful Internet Gambling and Enforcement Act of 2006 ("UIGEA"), Violation of the UIGEA, and Operation of Illegal Gambling Business. Each act of violation of the UIGEA carries a maximum penalty of 5 years in prison, a fine of $250,000 or twice the gross gain or loss, 3 years supervised released, and forfeiture of proceeds of offense. The DOJ also brought charges against the 11 defendants for Conspiracy to Commit Bank and Wire Fraud, and Money Laundering Conspiracy carrying separate 30 and 20 year prison sentences, fines of $1 million and $500,000 respectively. In total, at least $3 billion in civil laundering penalties from the poker companies and the defendants is being sought after.
Says Manhattan U.S. Attorney Preet Bharra "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 gambling profits. Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to 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."
Janice K. Fedarcyk, Federal Bureau of Investigation Assistant Director-In-Charge stated "These defendants, knowing full well that their business with U.S. customers and U.S. Banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business. 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."
According to the indictment, John Campos was arrested in Utah and Chad Elie was arrested Friday in Las Vegas, Nevada. Bradley Franzen is expected to appear in court for his arraignment on April 19th, 2011. The remaining parties who are not presently in the United States, have not been arrested but according to the U.S. Attorney's Office, the Southern District of New York is working with foreign law enforcement agencies and Interpol to arrest the defendants.
Visiting any of the 3 websites in question displays an FBI seizure notice:
And depositing on PokerStars for US players has been blocked as well:
We will continue to follow this story as it unfolds.