In a major crackdown on online gambling, the FBI and U.S. Attorney’s Office shut down three of the largest Internet poker sites and charged the owners with fraud, illegal gambling and laundering billions of dollars in illegal gambling proceeds.
Eleven people, including the owners of Full Tilt Poker, PokerStars and Absolute Poker, have been charged with violating US anti-internet gambling laws, according to charges filed by federal prosecutors in Manhattan, according to the Financial Times.
The feds also seized five Internet domain names used by the companies to host their poker games and issued restraining orders against 75 bank accounts in 14 countries used to process payments. The U.S. attorney’s office is also seeking $3 billion in damages. The defendants could face maximum penalties of 30 years in prison $1 million fines.
Visitors to Full Tilt Poker, PokerStars and Absolute Poker on Saturday were met with this notice from the FBI declaring the domain names had been seized by federal authorities — along with a reminder that illegal gambling is a federal crime.
The move potentially impacts millions of players. John Pappas, executive director of the Poker Players Alliance (PPA) advocacy group, said the poker community views the crackdown “as nothing less than a declaration of war against poker and the people who play it.”
PokerStars posted a statement early Saturday through its computer software and on Twitter saying the company has had to suspend real money play to customers based in the U.S. “Please be assured player balances are safe. There is no cause for concern,” the statement said. “For all customers outside the U.S. it is business as usual.
Former U.S. Senator Alfonse D’Amato, chairman of the PPA, said he was “shocked” by the arrests and indictments. “Online poker is not a crime and should not be treated as such. We are currently gathering all of the information around today’s announcement and will offer detailed analysis when the full facts become available.”
Earlier, Manhattan U.S. Attorney Preet Bharara said in a statement that “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.”
FBI Assistant Director in Charge Janice Fedarcyk added the defendants “tried to stack the deck,” in a statement. “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 feds say the sites violate the Unlawful Internet Gambling Enforcement Act passed in 2006. The poker companies which are all based overseas have argued they operate outside the reach of U.S. law. The U.S. government considers Internet gambling to be illegal. Still, it’s been estimated up 15 million Americans gamble up to $6 billion per year online.
The feds say defendants Isai Scheinberg and Paul Tate of PokerStars, Raymond Bitar and Nelson Burtnick of Full Tilt Poker and Scott Tom and Brent Beckley of Absolute Poker “arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls. ”
Of the billions in payments the poker companies tricked U.S. banks into processing, “approximately one-third or more of the funds went directly to the poker companies as revenue through the ‘rake’ charged to players on almost every poker hand played online,” the FBI said.