FBI shut down three of largest poker sitesThe Daily Mail
April 14, 2011
Three of the largest online poker sites have been shut down by the FBI in a probe that could bring about the death of the internet gambling industry.
Eleven people, including the owners of Full Tilt Poker, Absolute Poker and PokerStars, were charged with bank fraud and money laundering.
In 2006, Congress passed a law prohibiting online gambling, but most of the leading sites found ways to work around the law using foreign banks. Prosecutors allege that in doing so they broke the law.
FBI assistant director Janice Fedarcyk said: '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, the companies arranged for money received from U.S. gamblers to be disguised as payments to non-existent websites purporting to sell merchandise such as jewellery and balls.
The indictment said the poker companies tricked U.S. banks into processing billions of dollars but some banks were conspirators in the scheme to bypass U.S. laws that make it illegal to handle gambling proceeds.
The latest crackdown could finally bring the end of the online gambling industry, which has taken off over the last decade, drawing an estimated 15 million Americans to bet online.
Three of the 11 executives were arrested on Friday morning in Las Vegas and Utah. Officers are searching for the others, who are all understood to be abroad.
The indictment, filed in New York, seeks $3 billion in money laundering penalties and forfeiture from the defendants.
In addition to the charges, restraining orders were issued against 76 bank accounts in 14 countries used by the poker firms and their payment processors.
Five Internet domain names used by the companies to host their games were also seized by the authorities, who filed a complaint seeking $3 billion in money laundering penalties and forfeiture from the poker companies.
By Friday afternoon Absolute Poker's site displayed a message explaining that 'this domain name has been seized by the F.B.I. pursuant to an Arrest Warrant.'
Prosecutor Preet Bharara said: '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.'
Among those arrested was John Campos, the part owner of SunFirst Bank, a small private bank in Saint George, Utah, who agreed to process online poker transactions.
U.S. authorities are seeking the assistance of Interpol and foreign law enforcement to apprehend the eight men who are currently abroad.
Three of the defendants are Canadians. One of them, Isai Scheinberg, 64, the founder of PokerStars, who has dual Israeli-Canadian citizenship and lives in the Isle of Man.
All of the others are U.S. citizens. Most of them live outside the United States, in the Isle of Man, Ireland and Costa Rica.
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 and wire fraud.
U.S. law prohibits U.S. financial institutions from knowingly accepting payments for online gambling made through credit cards, electronic funds transfers, and checks.
The U.S. ban on Internet gambling has been challenged as an unfair trade restriction at the World Trade Organization.