You Gotta Know When to Fold 'Em: FBI Takes Over Online Poker Sites
Update: Federal prosecutors have announced that they have reached agreements with Full Tilt and Pokerstars. The government will restore these entities domain names so they can begin returning money to U.S. based poker players. To date, three people (Bradley Franzen, Chad Elie, and John Campos) have been arrested and all are free on bail.
The FBI has taken control of the domains for Pokerstars, Full Tilt Poker, and Absolute Poker, among other sites, in an effort to prevent U.S. players from logging into the sites as the U.S. Attorney’s Office in Manhattan has filed an indictment against the owners of these businesses along with the payment processing centers which clear the online transactions. The indictment charges eleven individuals with bank fraud, illegal gambling, and money laundering. The indictment stated, “[a]s 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.” The indictment also alleged that the defendants used fraudulent methods to trick financial institutions into receiving payments by arranging 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 jewelry and golf balls. The indictment charged the defendants with conspiracy to violate the Unlawful Internet Gambling Enforcement Act (UIGEA), by operating an illegal gambling business, conspiring to commit bank fraud, wire fraud, and money laundering. Maximum penalties from these charges range from five years in prison and a $250,000 fine to 30 years in prison and a $1,000,000 fine (or twice the gross gain or loss).
This is not the first time that the gambling sites have been under attack as throughout the past few years there have been numerous indictments of payment processors in the United States who were handling the financial transactions of the online poker sites. As processors continued to be targeted and shut down by federal prosecutors, the indictment alleges that the sites “purchased the principals of a few small, local banks” that were facing tough financial times “in return for multi-million dollar investments in the banks.” As of Friday morning, Chad Elie and John Campos, both involved with payment processing centers, had been arrested and the U.S. Attorney’s Office was working with Interpol to arrest the remaining nine individuals who are located abroad.
My name is Christopher Fusco. I am the managing partner of Callahan & Fusco, LLC with offices in New York, New Jersey, and Pennsylvania.