With a solid 80 pages of legalese to pore over, most people are having a pretty rough go of it in trying to make heads or tails out of the criminal indictment and civil lawsuit that were filed on Friday –now dubiously referred to in online poker lore as “Black Friday”. In this article I’ll take a look at the crux of the case and what charges the owners of PokerStars, Full Tilt Poker, and Absolute Poker/UB Poker are facing.
First, on the criminal side the Department of Justice issued a nine-count indictment against the following people:
- Full Tilt Poker: Raymond Bitar and Nelson Burtnick
- PokerStars: Isai Scheinberg and Paul Tate
- Absolute Poker: Scott Tom and Brent Beckley
As well as indicting the following payment processors and bank executives: Chad Elie, John Campos, Ryan Lang, Ira Rubin, and Bradley Franzen; all of whom live in the United States and were taken into custody on Friday.
In addition to the criminal charges there is also a very serious civil case filed by the government that is seeking some $3 billion in money laundering funds as well as an attempt to seize control of the online poker sites themselves.
The crux of the case seems to revolve around the formation of shell companies which were used to mislead US banks as to the type of payments they were processing, with the online poker sites often setting up phony e-merchant businesses and listing online poker transactions as all manner of items, even golf balls. Here is the passage from the press release issued by the FBI and DOJ regarding this system the poker rooms put in place:
“Because U.S. banks and credit card issuers were largely unwilling to process their payments, the Poker Companies allegedly used fraudulent methods to circumvent federal law and trick these institutions into processing payments on their behalf. For example, 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.”
There is also the charge that the online poker rooms used struggling banks to process their payments by “investing” heavily in these banks –which is how some of the bankers listed above got caught up in this snare.
Overall, many people are misrepresenting the problem as the government cracking down on online poker, when the reality of the situation is that the US government is cracking down on online poker sites that were violating other –non-poker/gambling laws—which is evidenced by the overlooking of other online poker rooms serving the US market like a number of Merge Gaming Network Sites, Doyles Room, and Cake Poker.
Related Posts
- Poker Payment Processor Douglas Rennick Receives Six Months Probation - September 30, 2010
- USA DoJ Shuts Down Major USA Online Poker Sites - April 16, 2011
- First Government-Run North American Casino Shut Down in Six Hours - July 26, 2010
Written by Steve Ruddock on April 18th, 2011
We need the help of all Poker players. There is now a facebook page that has been started to deal solely with this seriously impacting latest poker issue. It is to be the players voice where they will receive ALL available information and contribute their views. It is committed to firstly retrieving all monies owed and then the long term stability of the game. We care about the players not the owners of the sites or Government. Please support by joining the page and tell others. Once we get the numbers on the page we have ideas to share.
http://www.facebook.com/pages/USA-online-poker-forum/123902074354258
Robert, the UIGEA has been around since 2006. I think it’s a little too late to start writing to your congressman/woman now that the remaining “big” three online poker rooms are gone. Stars/FTP/Absolute/UB only stayed in the U.S.A post UIGEA because they had no shareholders to answer to and made a good decision to stay in the US (and make billions and billions of USD during the last 4.5 yrs) believing that online poker should be legal as I do too, however, you have to respect the laws of the nation you’re doing business in.
The deeper details of these allegations go further than most know about such as kickbacks and things of that nature with the banks and the executives of these poker sites. I don’t think there is anything anyone can do until the indicted individuals all turn themselves in and then they can really fight it out with high-paid lawyers in the courts and maybe, just maybe some legislation will come out of it with an overturning of the UIGEA.
You are absolutely correct Gary: far too late to write your congressman (like that does any good anyway). UIGEA was a dick move from the get-go by our elected officals; attached to something far more popular at the last minute. Hardly anyone knew this particular legislation existed or had any serious chances of passing until it was rammed down our throats. The major online poker companies did not see fit to bribe (lobby) the right politicians at that time, then compounded their original faux pas by pulling shady banking deals (these always come out eventually due to the enormous amount of regulation in banking). Now they are reaping the fruits of these bad decisions. Very naive & reckless for a multibillion $ company to behave this way.
What is patently disturbing, is the uncontroverted fact, that irrespecitve of whether or not the UIGEA will withstand further legal scrutiny, or whether Barney Franks propsed legislation has legs and will get passed, is the fact that for online Poker to thrive, there needs to be legalization with the requisite taxation, and more importantly, competent regulation. At present, what you have is an uneven playing field, regulated out of Canada by a tribe and others that have influence and self-serving interests. Nothing has been said about the multiple instances of cheating and collusion on Absolute and Ultimate Bet; nothing has been said about Scott Tom’s alleged creation and utilitzing “super account,” to create bots and cheat out other players; nothing has been said about the cheating by Russ Hamilton; and, nothing has been said about the refunds tendered by all sites for their “discovering” cheating by players from China, and elsewhere and the silent refunds to the cheated players!
It is absolutely imperative that for online Poker to survive, there must be appropriate REGULATION similar to the NEVADA GAMING COMMISSION.
I am not aware that the battle to catagorize poker as gambling has been won. It is a game of skill. I personally do not believe, based on the wording of the UIGEA, that the UIGEA even applies to poker. If poker is not illegal in our conuntry or state, then how can they use this law to prosecute poker sites? People were not allowed to transfer funds to the poker site of thier choice because of a misunderstanding of the law by banking institutions to begin with. They did what they needed to do. Am I out of line? Has poker already been deamed as gambling? Is there a law in the United States that says poker is illegal? Here is the basis of my argument, directly from the UIGEA. – “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.” I think the DoJ is a little ahead of themselves this time, hopefully it does not cost us more bad economy by being sued by a poker site and loosing.