Breaking News: DOJ indicts founders of Stars, Full Tilt, AP

[The Buzz]

The Internet has been aBuzz in the last 15 minutes about reports that the U.S. Department of Justice has indicted the three largest Internet poker companies operating in the U.S. Those companies are PokerStars, Full Tilt Poker and Absolute Poker.

MarketWatch.com has a brief piece published now. The GPWA's Vin Narayanan is currently digging for more information on what could be a monumental story:

SAN FRANCISCO (MarketWatch) -- Federal authorities unsealed an indictment Friday against the founders of the three largest internet poker companies operating in the U.S. The indictment charges eleven defendants, including the founders of PokerStars, Full Tilt Poker, and Absolute Poker, with bank fraud, money laundering, and illegal gambling offenses, according to Federal authorities in New York. Restraining orders were issued against more than 75 bank accounts used by the poker companies and their payment processors, while five Internet domain names used by the companies to host poker games were seized, federal authorities added in a statement.

[The Buzz]

Here's a link to the PDF from the DOJ about the charges:

http://www.justice.gov/usao/nys/pres...dictmentpr.pdf

[AK]

Well this could be a very bad thing.. If they do not get up fast other states will follow suit soon and affiliates will be out of a job.

[The Buzz]

The GPWA's Vin Narayanan has published a story on today's landmark news:

The Department of Justice has indicted the founders of PokerStars, Full Tilt Poker and Absolute Poker on charges of bank fraud, money laundering, illegal gambling offenses and violating the Unlawful Internet Gambling Enforcement Act (UIGEA).

In the indictment unsealed today, the DOJ seized five Internet domains and issued restraining orders against approximately 76 bank accounts in 14 countries. The DOJ is also seeking at least $3 billion in civil money laundering penalties in addition to the forfeiture of funds.

PokerStars founder Isai Scheinberg, who recently completed a deal with Wynn Resorts to create PokerStarsWynn.com when online poker is licensed and approved in the U.S., was among those indicted. Wynn has not released a statement on the indictment at this time.

Paul Tate, who allegedly led PokerStars payment processing department was indicted as well. Full Tilt founder Raymond Bitar and former processing chief Nelson Burtnick were also named in the indictment, as were Absolute Poker founders Scott Tom and Brent Beckley. Absolute Poker and Ultimate Bet are now owned by Blanca Games. According to the indictment, Burtnick also served as the head PokerStars payment processing unit at one time.

The DOJ indicted Ryan Lang, Ira Rubin, Bradley Franzen and Chad Elie, who operated as intermediaries between the poker companies and payment processors. for the poker companies. And John Campos, the vice chairman of the board and part owner of SunFirst Bank, was charged for his role in the process.

Campos was arrested this morning in Las Vegas while Elie was arrested in Utah, according to the DOJ.

The DOJ says the other defendants are not in the U.S. and that it is working with Interpol secure their arrests.

Visitors to Absolute Poker's website today were greeted with a message beginning with "This domain name has been seized by the F.B.I. pursuant to an Arrest Warrant in Rem obtained by the United States Attorney's Office for the Southern District of New York."

PokerStars players on the popular poker forum TwoPlusTwo have indicated that they are unable to play today. According to a screen grab posted by one player when he tried to register for a tournament, PokerStars is telling players "We are sorry but, due to government regulations, playing real money ring games is not allowed in your area."

In a statement issued today, U.S. Attorney Preet Bharara from the Southern District of New York made it clear he believed PokerStars, Full Tilt and Absolute Poker had earned the indictments.

"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," Bharara said. "More over, as we allege, in their zeal to circumvent the gambling law, 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."

The most elaborate scheme to circumvent the UIGEA, which makes it illegal for financial institutions to process unlawful gambling transactions, involved Elie and Campos.

According to the indictment, Elie and some others approached Campos, who is part-owner of SunFirst Bank, about processing online poker transactions.

"While expressing 'trepidations,' Campos allegedly agreed to process gambling transactions in return for a $10 million investment in SunFirst by Elie and an associate, which would give them a more than 30% ownership stake in the bank," the indictment reads. "Campos also requested and received a $20,000 'bonus' for his assistance.

"In an e-mail, one of Elie's associates boasted that they had 'purchased' SunFirst and that they 'were looking to purchase' a 'grand total of 3 or 4 banks' to process payments."

"The vast majority of the charges pertain to bank fraud," said Buffalo State business law professor Joe Kelly after reading the 52-page indictment.

"I don't think it's a violation of the UIGEA or illegal gambling business laws," Kelley added. "In order for it to be a violation of the illegal gambling business law, you have to prove poker violates New York state law."

[Redbush54]

Interesting read here xxxhttp://www.businessinsider.com/boy-genius-online-poker-scandal-2011-4

[Chips]

Well this could be a very bad thing.. If they do not get up fast other states will follow suit soon and affiliates will be out of a job.

Wasn't a state government that did this, this is the US Department of Justice aka Feds.

[CoopersPick]

I was just about to post this as I just got an email from Betus about this read what they said there attempting to take advantage being off-shore:
Big Shake-up in the Poker industry for US players!

As you may have heard, the DOJ has seized all the major US Poker domains including AbsolutePoker, UltimateBet, PokerStars, Fulltilt and many more.

Perhaps now is a good time to divert your US poker traffic over to BetUS.com, and or promote our Poker room to your databases as players in the other poker rooms may be pulling out and looking elsewhere to play.

You can read the news at:

http://www.marketwatch.com/story/doj...MW_latest_news

You can also find the DOJ indictment here:

http://www.justice.gov/usao/nys/pres...dictmentpr.pdf

[FictionNet]

Whoa. This is huge. For the record, I'm logged into and playing at Full Tilt right now. I'm UK.

[vinism]

I was just about to post this as I just got an email from Betus about this read what they said there attempting to take advantage being off-shore:
Big Shake-up in the Poker industry for US players!

As you may have heard, the DOJ has seized all the major US Poker domains including AbsolutePoker, UltimateBet, PokerStars, Fulltilt and many more.

Perhaps now is a good time to divert your US poker traffic over to BetUS.com, and or promote our Poker room to your databases as players in the other poker rooms may be pulling out and looking elsewhere to play.

You can read the news at:

http://www.marketwatch.com/story/doj...MW_latest_news

You can also find the DOJ indictment here:

http://www.justice.gov/usao/nys/pres...dictmentpr.pdf

They've only seized 5 domains. I know Absolute Poker has a message on their site saying it's been seized. Still working my way through the indictment to see what other domains have been seized. But it's only 5.

[casinochipsj]

twoplustwo is very active and many poker pro twitter accounts

[vinism]

The GPWA's Senior Editor Aaron Todd enjoys playing online poker himself. And here's what he wrote after learning about the indictments:

The day online poker died

15 April 2011

By Aaron Todd


Senate Majority Leader Harry Reid (D-Nev.) told Steve Wynn that online poker was "as American as apple pie" in an effort to convince the casino mogul that he should be in favor of regulating the game.

If that's the case, April 15, 2011, may be remembered as the day that online poker died.

So bye, bye, Miss American Pie.
Took my gutshot to the river, but the river was dry.

The United States Attorney for the Southern District of New York unsealed an indictment Friday morning charging 11 people, including the owners of PokerStars, Full Tilt Poker and Absolute Poker, with bank fraud, money laundering and illegal gambling offenses. The sites' domains have been seized and 76 bank accounts in 14 countries have been frozen in an attempt to college $3 billion in civil money laundering penalties.

I had been covering the online gambling industry for about eight months when the Unlawful Internet Gambling Enforcement Act passed in Congress in October, 2006. I was in shock at the time, worried that the money that I had online wouldn't be accessible to me, and wondering if I'd ever be able to play online poker again.

It turned out I didn't have much to worry about at the time. The sites that shut out U.S. players (e.g., Party Poker, 888 Poker) paid their American players in an orderly fashion. Many of my friends, who used to play online all the time, shut down their accounts and cashed out for good, while I (and tens of thousands of other Americans) continued to play on the sites that didn't leave the U.S. (namely, PokerStars and Full Tilt). In the aftermath, PokerStars and Full Tilt grew immensely as the market underwent massive consolidation. They reveled in their growth, all the while saying that the UIGEA didn't apply to them, since Internet poker is a game of skill and not gambling.

And they were probably right. While the Southern District of New York rolled out indictments against payment processors and online sports betting operators, it seemed that Internet poker sites were immune from prosecution. Until now.

Every lawyer I've talked to about online gambling in the U.S. has said that the Department of Justice hadn't gone after online poker companies because they weren't sure they'd win a case where they argued that:

1. Outside of sports betting, the Wire Act applies to online gambling,
2. Poker is gambling and not a game of skill.

But if they can charge online poker sites with money laundering, well, all bets are off.

So as a small stakes, recreational online poker player, how do I feel about what happened today?

Well, first of all, I'm not worried that I'll lose the funds in my online poker accounts. PokerStars and Full Tilt Poker both have a sizeable presence outside of the U.S., and in order to maintain that customer base, they'll need to make sure they pay all their U.S. players what they're due (I don't have any money on Absolute Poker, but I would probably be more concerned about their ability to pay me), though it could take months or even years, for that to happen. Since I don't have a lot of money on the sites, that's the least of my concerns.

More than anything I'm sad that it could be years before I'll be able to play online poker for real money again. PokerStars has already stopped allowing Americans in real-money games, and Full Tilt is likely to follow suit in the very near future. I won't be moving my game to any other site that makes the foolhardy decision to continue to accept U.S. play, and I doubt many of my fellow Americans will either. Today's indictments will result in a sudden exodus of Americans from the online poker tables, and the vast majority of those players will be sitting out until online poker is explicitly legal, licensed and regulated.

[Anthony]

With all of the alliances forming I thought we were on the road to regulation, not enforcement.

[AmCan]

With all of the alliances forming I thought we were on the road to regulation, not enforcement.

The two are inversely related. Gary Loveman was on CNBC for 15 minutes talking about Caesars and how they need online gaming licensed by the US government. They've hit the biggest online rooms for US players, now the congress can get poker players and vegas casinos applauding for them by legalizing a US based online poker.

[arkyt]

I'd guess before the weekend is up any and all casinos still in the US will be pulling out ... and USA facing operations will come to a grinding halt. This will undoubtedly leave affiliates who have a large percentage of their income in US facing operations standing in the soup kitchen lines. Thanks big brother - for doing your best to tread on me.

"And the biggest irony of all? It's been rumored that the only reason the FBI got their hands on him is because Full Tilt or Poker Stars (the companies he used to work for and stole from) tipped off the FBI that he was going to be traveling to the United States last year."

LMAO - so FTP and PS tipped off the feds to burn this guy and in the end he is going to burn them! YES - true irony - stupid fux; so ignorant that they thought they were free and clear to start entering into agreements with landbased casinos!

MGS - your USA facing operations will land you all in the pen as well!

The only casinos that are going to stand a chance of making it one day will be those that withdrew from USA years ago.

I hope all my usa facing affiliates have a back up plan - its about to get very ugly.

[FictionNet]

As mentioned, I'm in the UK. I am currently logged into Full Tilt and messing around in a freeroll. I see FT's freeroll for US only players has thousands of entrants so presumably, US players can still login and play at freerolls.

I thought I'd take advantage of some overlays with no USA players to compete with (I need all the help I can get with poker) but even though I'm in the UK, I cannot deposit. Check my screenshot.

[vinism]

Thanks for posting this FictionNet. I was under the impression that it was operations as normal in Europe.

[FictionNet]

Just realised that FT's .net domain is still live. Bit surprised there's no announcement on there from them.

[Anthony]

http://news.yahoo.com/s/ap/us_poker_...9ubGluZXBva2Vy

Michael Weaver, a spokesman for Wynn Resorts, a major casino company run by billionaire Steve Wynn, announced Friday that it had terminated its alliance with PokerStars as a result of the criminal indictment.

So much for alliances.

[arkyt]

Sorta makes a guy wonder what role, if any, these Vegas Casinos had in assisting in the indictment...

[TheCanadianGambler]

I don't understand how they figure they can police the world like this. I could see preventing Americans from visiting the sites, but seizing the domains so that nobody in the world can go to those sites is ridiculous, and far beyond the reach they should have.

I find it very scary that they can get away with doing this, are they now the internet's law enforcement? Just because an American visits a website they don't like, they can just shut it down?

I was going to say I'm glad I live in Canada, but apparently that doesn't even matter because they can enforce anything they want, anywhere in the world.