Tag: indictments

DoylesRoom and 9 Other Domains Seized

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Earlier today it was announced that a federal grand jury returned indictments charging two gambling businesses and three defendants with conducting an illegal gambling business and money laundering. The two indictments were returned on April 26, 2011 and unsealed today. As part of the investigation, 11 bank accounts located in Charlotte, North Carolina; Guam; Panama; Malta; Portugal; and the Netherlands; and domain names associated with 10 internet gambling sites were also seized today.

The following internet domain names were seized pursuant to court order:

 

 

Doylesroom.com
Bookmaker.com
2Betsdi.com
Funtimebingo.com
Goldenarchcasino.com
Truepoker.com
Betmaker.com
Betgrandesports.com
Betehorse.com
Beted.com.

Anyone who tries to access those web sites will be directed instead to a banner that provides notice that the domain name has been seized by order of the court. The banners are expected to be posted later today.

ThrillX Systems, Ltd., d/b/a BetEd; Darren Wright; and David Parchomchuk, both of British Columbia, Canada are charged in one indictment. K23 Group Financial Services, d/b/a BMX Entertainment; and Ann Marie Puig, age 35, of San Jose, Costa Rica are charged in a second indictment.

The indictments and seizures were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; Anne Arundel County Police Chief James Teare, Sr.; and Colonel Terrence Sheridan, Superintendent of the Maryland State Police.

“It is illegal for internet gambling enterprises to do business in Maryland, regardless of where the website operator is located,” said U.S. Attorney Rod J. Rosenstein. “We cannot allow foreign website operators to flout the law simply because their headquarters are based outside the country.”

“These indictments are the direct result of impressive undercover investigative work by our agents, along with the close collaboration of our law enforcement partners here in Maryland,” said William Winter, Special Agent in Charge of ICE’s Homeland Security Investigations (HSI) in Baltimore. “The proceeds from illegal Internet gambling are often used to fuel organized crime and support criminal activity. ICE HSI will work diligently to uncover illicit transactions involving these types of financial crimes. Together, with our law enforcement partners, we will disrupt and dismantle organizations that commit these crimes, regardless of their location, whether here in the United States or abroad.”

“Internet gambling, along with other types of illegal e-commerce, is an area of great interest to IRS Criminal Investigation,” said IRS Special Agent in Charge Rebecca A. Sparkman. “Laundering money from illegal activity such as illegal internet gambling is a crime. Regardless of how the money changes hands – via cash, check, wire transfers or credit cards – and regardless of where the money is stored – in a United States financial institution or an offshore bank – we will trace the funds. IRS Criminal Investigation will vigorously investigate and recommend prosecution against the owners and operators of these illegal enterprises to the fullest extent possible.”

According to the two count indictments and the affidavit filed in support of the seizure warrants, ThrillX, a registered company in British Columbia, Canada, with offices in Vancouver, Canada and San Jose, Costa Rica, is a software solutions provider producing online sports book and casino software. BMX Entertainment, based in Limassol, Cyprus, operates six websites that offer online sports betting services.

The indictments allege that the defendants own and manage illegal gambling businesses involving online sports betting. The affidavit alleges that online gambling sites are run by companies located outside of the U.S., while the majority of customers are in the U.S. Internet gambling operators rely upon the U.S. banking system, and more specifically, money-processing business generally called “payment processors,” to facilitate the movement of funds to and from their customers, the gamblers. Typically, an internet gambling operator directs the payment processor to collect funds from individual gamblers which are used to wager with the gambling organization. Those gambling proceeds are transferred to an offshore foreign bank. The internet gambling operator then sends a check or wire transfer from an offshore bank to the payment processor, directing the payment processor to distribute the money to gamblers for their winnings.

The affidavit filed in support of the seizure warrants alleges that Homeland Security Investigations in Baltimore, Maryland opened an undercover payment processor business, called Linwood Payment Solutions. Linwood allowed undercover agents to gain person-to-person contact with top managers of gambling organizations to discuss the Internet gambling business, to negotiate contracts and terms of the processing, and to handle the intricate movement and processing of collection and payment data from the gambling organizations to the banks.

The affidavit alleges that on November 12, 2009, a Maryland-based online gambler and cooperating informant confirmed that he/she frequented gambling sites, opened accounts and gambled in Maryland. The gambler agreed to set up online gambling accounts and was provided $500 to place bets on gambling websites. The gambler created an account on a BetEd website and placed several bets. On March 30, 2010, BetEd used Linwood to wire transfer $100 in winnings to the gambler’s bank account.

Linwood allegedly processed gambling transactions since 2009 for BetEd, K23 and other gambling organizations using banks located in Guam and Charlotte, North Carolina. According to the affidavit, between December 2009 and January 2011, Linwood processed over 300,000 transactions worth more than $33 million, including transactions for individuals in Maryland. Between February 2010 and March 2011 alone, BetEd directed Linwood to wire transfer over $2.5 million of collected gambling proceeds to bank accounts in Panama; and between February 2011 and April 2011, K23 directed Linwood to wire transfer over $91,000 of gambling proceeds to bank accounts in Portugal and Malta.

The indictments and affidavit seek the forfeiture of the bank accounts used to process the gambling transactions, as well as domain names of websites used by the defendants to further the online gambling transactions.

The defendants face a maximum sentence of five years in prison for operating an illegal gambling business and a maximum of 20 years in prison for money laundering. No court appearance has been scheduled.

UPDATE: We have it on good authority that DoylesRoom will continue to cater to US players and may even get their domain name back. We’ll keep you posted.
Bookmaker is already back up and running under a new domains and sent this email out to all players;

As you may already know, Bookmaker has temporarily lost the rights to the Bookmaker.com domain. We are confident that in time, it will be returned to us, until then, we have launched a new, temporary site: bmaker.ag.

Despite having lost the domain, none of the business operations have otherwise been affected. Player account balances and information are safe and secure. Effective immediately, players can log on to bmaker.ag. and it’s business as usual.

You likely won’t notice any other changes at all and will experience all the same features and benefits as our original site; just on a new address.

We sincerely apologize if you were affected by our interruption. As always, if you have any questions or concerns please call our customer service department at 1-866-9Bookmaker.

PokerStars Questions Answered

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This is a compilation of information from PokerStars on the recent withdrawal from the United States market.

Statement from PokerStars on why USA players can no longer play for real money:

On 15 April 2011, PokerStars ceased providing real-money poker to residents of the United States and related territories. Real money play and deposits by US residents are strictly prohibited.

An agreement has been reached with the US Department of Justice to allow United States PokerStars customers to cashout their funds. PokerStars will work diligently to expedite those withdrawals. All PokerStars player deposits are completely safe.

Players from the United States can continue to play on our site for play money only. New players who wish to create an account will need to do so using our play-money-only software.

Why USA players could not access the web page or support email

The Justice department seized all the .com name including access to the .com support address. As part of a deal with the Department of Justice, USA players can now, again, access any of the .com sites including the support email address.

Can I get my Money?

PokerStars has reached an agreement with DoJ to refund players their money. Because the recent issue removed all of the old processing structure, at this time, the cashout option in the cashier is disabled.  It will be enabled when a new system is put in place. PokerStars says that getting funds to players is their top priority.

Cashouts that were requested before April 15, 2011 will be cancelled and returned to players accounts. Players can view the cashier, but US players cannot transfer to other players. Any tournaments tickets or T$ will be converted to cash, though PokerStars stresses that this will not happen immediately and asks for patience. At this time, PokerStars has yet to work out a fair plan for monetary consideration in exchange for FPPs.

All US Players who were registered in future tournaments have been unregistered and their buyins have been refunded to their accounts.

Trying to get around the restrictions

I am sure many of you are scheming or hoping there is a way to get around the new order of things. PokerStars has answered some of those common thoughts.

Players thinking they can just change their address to a new country need to know that just changing their address does not allow them to play for real money again. PokerStars needs copies of photo identification as well as a recent utility bill showing your new physical address.  If you can prove that you have left the USA, your account balance will be restored to you, including VIP status and your FPP balance.  You cannot play for real money by just taking a trip outside the country. Accounts are blocked until you show proof of new address.

If you cook up some IP rerouting scheme like a VPN, PokerStars says they will revoke your privileges for trying.

Foreigners traveling to the United States will not be allowed to play on PokerStars while in the US.

US players can buy into PokerStars live events using their real money account balances, providing they have the money already in their accounts. They cannot deposit the money and then use it to play the event.  PokerStars live events like European Poker Tour will proceed as planned. Players from the United States who have won packages to these events will still be allowed to play.

US players are welcome to play for play money if they so choose but will need to set up a new .net account.

Federal Poker Indictments: Revisiting Prohibition

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The timing is suspicious.

March saw Nevada regulators approving a partnership between Caesars and 888, and Wynn announcing a joint venture with PokerStars.  Now comes the indictments, three-billion-dollar civil suit and seizures of domain names by the feds.  Wynn immediately cancelled his plans.  Players were panicked.

Which was, of course, the goal.

If the allegations are true, the operators brought this on themselves, by lying and bribing bank officials. Of course, the prosecutors have the problem of convincing a jury that there is bank fraud when the “victims” are tricked into making millions of dollars.

And will this be the end of Internet poker?  Did Prohibition end drinking?

Prohibition created modern organized crime, by outlawing alcoholic beverages.  When people want something and it is illegal, organizations will arise to fill the demand.  How much more so when the activity, online poker, is not even clearly illegal?

Every action by the U.S. federal government makes it more difficult for it to go after the next operator.  The UIGEA, rammed through by the failed politician Bill Frist (R.-TN), can be seen as an anti-consumer-protection law, because it scared all of the publicly traded gaming companies out of the U.S. market.  Then prosecutors went after payment processors, making it more difficult for players to find legitimate ways to send their money to betting sites.

Now the feds have seized .com domain names and charged operators with bank fraud.  So, gaming sites are switching to .eu and .uk, and cutting off all physical contact with the U.S.  Even the present American operators can’t be extradited, so what hope is there for the DoJ to bring future foreign operators here to stand trial?

The Grand Jury has been meeting for at least a year.  The criminal indictment against PokerStars, Full Tilt, Absolute and their founders, was unsealed by the U.S. Attorney for New York on April 15, but bore a date-stamp of March 10.  So why now?

Besides the Caesars-888 and Wynn-PokerStars agreements, the Nevada Assembly Judiciary Committee recently approved a bill to regulate online poker.  And the District of Columbia actually made it legal.

The DoJ has been waging a war of intimidation against Internet gambling for years, successfully scaring players, operators, payment processors and affiliates into abandoning the American market.  Lacking the two essentials to any prosecution – a statute that clearly makes the activity illegal and a defendant physically present in the U.S. – the feds have announced showy legal action against easy targets about every other year.

Online poker is not an easy target, since a federal Court of Appeal ruled the Wire Act is limited to bets on sports events.  And tricking financial institutions into processing poker payments seems a technicality, especially since the banks made millions without paying a penny in fines.

But getting a bank to agree to process gambling transactions in return for a $10 million investment is an easier case, if true.  I can understand approaching a small bank – so small that the officer and part-owner who allegedly arranged the deal, asked for, and received, only $20,000 for his “bonus.”  But why would you do this in Utah, of all states?

There are lots of interesting nuggets in the legal papers.  The DoJ claims that one-third of the billions of dollars players deposited went to the operators through the rake.  That number seems high, but if true, it explains why everyone wants to operate an online poker room, with few expenses and no chance of losing to a lucky gambler.

Most of the activities cited occurred after the passage of the UIGEA.  This is a subtle acknowledgment that operators who left the U.S. in 2006 have nothing to fear.

Even if there was a bribe, the feds are still going to have to prove that the poker was illegal.  Since the Wire Act won’t work, prosecutors used 18 U.S.C. 1955, which makes it a federal felony if five or more people do more than $2,000 in business a day in violation of state gambling laws.  The indictment relies on “New York Penal Law 225 and 225.05 and the laws of other states.”  There is a “thank you” to the Washington State Gambling Commission, indicating that the DoJ is probably going to piggyback on that state’s 2006 law outlawing all Internet gambling, as well.

The Washington statute was upheld by the State Supreme Court.  Still, there are problems.  State laws are presumed not to reach beyond their borders.  And even if Internet poker is illegal in that state, it is quite a leap to seize domain names for the entire country and threaten bank accounts in places like Panama.

The only state with a law better than Washington’s is Nevada.  But basing this attack on Internet poker on Nevada law would look like it was motivated by the landbased casinos.  After all, who are the big winners here?

We will probably see the first attacks on the government’s cases in motions to free the bank accounts, especially those outside the U.S.  And the poker operators will undoubtedly fight to get their .com names back for the rest of the world.

The operators will never stand trial.  The only U.S. extradition treaty I have found that covers illegal gambling is with Hong Kong.  Calling it bank fraud won’t work, since the defendants can show their local courts that it is based on gambling.  And it is fundamental to all extraditions that the activity be illegal in both countries.  No nation will extradite an individual to be tried for the very activity that that nation licenses.

There may not even be a settlement.  The DoJ accepted $405 million from PartyGaming and one of its founders and $100 million from Neteller and its founders.  But those companies had already left the U.S. gaming markets.  The DoJ will insist on a guilty plea to something, which might kill the operators’ chances of getting licensed when American laws change.  And no amount of money will buy them the right to open up again without a change in the law.  So what would these operators get from a settlement, other than not having to be worried about getting arrested changing planes?

It will be interesting to watch the fallout.  There are a lot of famous American poker players and others who are associated with the indicted operators.  They should be getting their affairs in order.

Meanwhile, like a raid by Elliot Ness on breweries and speakeasies during Prohibition, there are now wonderful opportunities for new operators to fill the vacuum.  Unless, of course, Americans are actually going to stop playing poker on the Internet.

Republished with permission © Copyright 2011, I. Nelson Rose, Encino, California. All rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, www.GamblingAndTheLaw.com.