FBI: online poker sites "bet the house" on money laundering, fraud

from ChaoticFate.com by qew

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By Jacqui Cheng | Last updated about 6 hours ago

Federal prosecutors have charged some of the biggest names in online poker with bank fraud, money laundering, and illegal gambling, the US Justice Department announced on Friday. Those behind PokerStars, Full Tilt Poker, and Absolute Poker have had their domains seized by the Federal Bureau of Investigations (FBI), and 76 bank accounts owned by the companies have been temporarily shut down via restraining orders.

Online gambling technically became illegal in the US starting in 2006, when legislators barred wire transfers, "payment system instruments," and credit cards from being used as payment methods for online gambling sites. Unsurprisingly, this didn't stop many gambling sites from running offshore operations and continuing to grow. Full Tilt Poker, for example, has grown large enough that it regularly sponsors players at the World Series of Poker. The domains of popular poker sites are no secret among online gambling aficionados.

According to the DoJ, however, 11 defendants behind these poker companies used fraudulent methods to trick payment processors like Visa and MasterCard into accepting payments from US users. Members from all three poker sites allegedly "arranged" for payments to be processed for things like jewelry and golf balls.

The DoJ claims that the poker companies were able to accept "billions of dollars" in payments this way, but not without the help of co-conspirators who helped to open up cover-up bank accounts in order to store the money. These people allegedly created fake corporations and websites in order to disguise the payments, using whatever names "the processor can get approved by the bank."

It gets more sordid. After having bank accounts shut down in 2009, several defendants allegedly bribed small-time banking institutions into cooperating with the scheme. For example, a private bank in Saint George, Utah ended up accepting a $10 million "investment" from individuals behind the accused poker sites in exchange for the processing of gambling transactions, with a $20,000 bonus for the bank's vice chairman.

As a result, the 11 individuals behind the three poker sites now face "at least" $3 billion—you read that correctly, billion—in money laundering penalties, in addition to the shut-down of 76 bank accounts in 14 countries.

Visitors to Full Tilt Poker, Poker Stars, and Absolute Poker are greeted with the above

"These defendants, knowing full well that their business with US customers and US banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business," FBI Assistant Director-in-Charge Janice Fedarcyk said in a poker-pun-filled statement. "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."

So far, the reaction from the poker-playing community has been one of shock. Poker site TwoPlusTwo is filled with users expressing disbelief at the charges, and a thread in our own forums questions the legal issues behind pursuing non-US residents in the scheme. According to Manhattan US Attorney Preet Bharara, however, the charges are largely related to "tricking" US banks into participating in the fraudulent schemes. "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," he said.