Federal prosecutors are using aggressive new tactics against online poker companies based abroad — charging the people who provide U.S. banking and financial services to them with multibillion-dollar money laundering and wire fraud conspiracy, and seizing the websites they operate.
Two defendants were arraigned in federal courts in New York and Utah on Monday, a third man was expected in court Tuesday, and eight other defendants remain at large outside the U.S., an official from the U.S. attorney’s office for the Southern District of New York told The Washington Times.
Three online poker sites — Absolute Poker, Full Tilt Poker and PokerStars.com — were seized by the FBI last week and now display a banner to that effect. The banner notes that it is illegal, as a bettor, to accept any kind of credit, electronic payment or check “in connection with the participation of another person in unlawful Internet gambling.”
John Campos, 57, vice chairman of the board of SunFirst Bank, a small privately owned financial institution in Utah, appeared in U.S. District Court there; Bradley Franzen, 41, a payment processor for the poker sites, appeared in U.S. District Court in Manhattan; and Chad Elie, 31, another payment processor, was expected in the Manhattan court Tuesday.
All three men were arrested Friday as part of the largest case against the online gambling sites since Congress sought to outlaw them in October 2006.
Mr. Franzen received bailed on a personal recognizance bond of $200,000, the official said. Mr. Campos was bailed for $25,000 and told to appear in court in Manhattan later this week. No lawyer representing any of the three men could immediately be contacted.
Prosecutors said they were “working with foreign law enforcement agencies and Interpol to secure the arrest of” the eight defendants abroad, who included the founders of the three sites, believed to be living in Costa Rica, Ireland and the Isle of Man, according to the indictment.
“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,” U.S. Attorney Preet Bharara said in a statement.
In addition to indicting the owners and financiers of the websites and seizing their Internet addresses, prosecutors are seeking $3 billion in assets from the three companies and have seized or frozen 76 bank accounts they are suspected of using in 14 countries.
The move was greeted with howls of protest from online gamblers, many of whom said they had been frozen out of their accounts with the sites — where most players store their online winnings until they withdraw them.
The companies themselves issued statements reassuring users that their funds were safe, and were back up and running on non-U.S. Internet addresses by Monday.
“Our 1.2 million members are shocked and outraged,” said John Pappas, executive director of the Poker Players’ Alliance. Mr. Pappas said although the sites were up and running again, many U.S. users were unable to access their funds.
“Many players cannot get access to their money,” he said, “It is a confusing and concerning time for our members.”
“We think the government’s assertion that Internet poker is illegal is wrong,” Mr. Pappas added, noting that the law under which some of the charges were filed — the Unlawful Internet Gambling Enforcement Act — made it a crime to accept or process payments in connection with unlawful Internet gambling, but did not define such gambling. He called this “a legal gray area that Congress needs to address.”
The U.S. attorney’s office official said it was the second prosecution the office had launched under the act, the first being last year.
• Shaun Waterman can be reached at 123@example.com.
Please read our comment policy before commenting.