On Friday the 15th of April 2011, Preet Bharara, who is the United States Attorney for the Southern District of New York as well as Janice Fedarcyk, Assistant Director in Charge of the New York Field Office of the FBI, announced an indictment of 11 defendants who include the founders of Poker Stars, Full Tilt Poker and Absolute Poker.
They have been charged with bank fraud, money laundering and illegal gambling offenses. In a statement from the Department of Justice, the US has filed “a civil money laundering and in rem forfeiture complaint against the Poker Companies, their assets, and the assets of several payment processors for the Poker Companies”.
Furthermore, restraining orders were issued against more than 75 bank accounts that were used to process the Poker Companies’ payments as well as 5 internet domain names being seized. These include PokerStars.com, FullTiltPoker.com, UB.com and AbsolutePoker.com.
Preet Bharara stated the following: “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 Fedarcyk (FBI Assistant Director in Charge) also stated that “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.”
The Indictment went on to say that “on October 13, 2006, the United States enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), making it a federal crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.”
The indictment claims that the Poker Companies used illegal methods to get around federal law and trick them into processing illegal payments as a result. The transactions were coded and disguised as payments to merchants that didn’t exist claiming to sell items such as jewellery and golf balls. It goes on to say that the Poker Companies used “small, local banks facing financial difficulties to engage in such processing in return for multi-million dollar investments in the banks”.
As a result, John Campos was arrested on Friday morning. He is the Vice Chairman of the Board and part owner of SunFirst Bank based in Saint George, Utah. Elie, a business associate of Campos, was also arrested for his involvement. The other defendants charged were Isai Scheinberg and Paul Tate from Poker Stars, Raymond Bitar and Nelson Burtnick from Full Tilt Poker, and Scott Tom and Brent Beckley (Absolute Poker). They haven’t been arrested as they are not in the US.