PokerStars and Full Tilt founders indicted
PokerStars' Isai Scheinberg and Full Tilt's Ray Bitar among 11 accused of allegedly deceiving banks into processing billions of dollars in illegal gambling payments.
The founders of PokerStars, Full Tilt and Absolute Poker were among 11 people accused of alleged bank fraud, illegal gambling offences and money laundering in an indictment unsealed by federal prosecutors today.
The 52-page indictment and civil complaint seen by eGaming Review is seeking the forfeiture of at least US$3bn in civil money laundering penalties from the three companies and their defendants, alleging they “deceived or directed others to deceive United States banks and financial institutions into processing billions of dollars in payments.”
Restraining orders have also been issued against 76 bank accounts in 14 countries used by the poker companies and their payment processors. Five internet domain names used by the poker companies in the US were also seized. An FBI notice of the indictment charges greeted players seeking to access PokerStars.com, FullTiltPoker.com, UltimateBet.com, UB.com and AbsolutePoker.com this evening.
PokerStars’ Isai Scheinberg and Paul Tate, Full Tilt’s Raymond Bitar and Nelson Burtnick and Absolute Poker/Ultimate Bet’s Scott Tom and Brent Beckley are accused in US vs Scheinberg et al of having allegedly: “[A]rranged for the money received from US gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls.
“Of the billions of transactions that the poker companies tricked US 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 single poker hand played online,” the indictment continued.
Manhattan US Attorney Preet Bharara commented: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some US banks and effectively bribing others to assure the continued flow 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.”
PokerStars, Full Tilt and Absolute Poker are accused of allegedly persuading principals of a few small local banks “facing financial difficulties” to process payments on their behalf after US banks and financial institutions “detected and shut down multiple fraudulent bank accounts used by the poker companies” from late 2009.
One of the bank principals, John Campos, of SunFirst bank in Saint George, Utah, was arrested this morning, as was payment processor Chad Elie, accused of approaching Campos to allegedly process gambling payments for the poker companies in return for a US$10m investment in SunFirst. Campos will appear before a US magistrate court judge in Utah this Monday 18 April. Defendant Bradley Franzen is expected to appear for arraignment on 19 April in New York.
With regard to defendants Raymond Bitar, Isai Scheinberg, Paul Tate, Nelson Burtnick, Scott Tom and Brent Beckley, Ira Rubin and Ryan Lang, who “are not presently in the US”, federal prosecutors were “working with foreign law enforcement agencies and Interpol to secure the arrest of these defendants and the seizure of criminal proceeds located abroad”, according to the indictment.
While the charges contained within the indictment are merely accusations at this stage, the defendants could spend up to 30 years behind bars if convicted of conspiracy to commit bank and wire fraud, and up to 20 if convicted of money laundering conspiracy. Violations of UIGEA and of operating an illegal gambling business would carry a penalty of up to five years in prison.
The crackdown comes weeks after land-based casino group Wynn Resorts announced a partnership with PokerStars to create a new US-facing website PokerStarsWynn.com upon passage of federal regulation for online poker. Despite its European-listed rivals pulling out of the market upon passage of UIGEA, PokerStars has maintained its US activities “at all times have been lawful.”