The owners of three major online poker sites have been charged for a range of offenses in a crackdown on online gambling by US authorities.
In total, 11 people have been charged with bank fraud, money laundering and illegal gambling offences, according to charges unsealed on Friday. Additionally, the US filed a civil money laundering complaint against the poker companies, their assets and the assets of secondary payment processors that the companies used.
Three of the 11 charged are the owners of PokerStars, Full Tilt Poker and Absolute Poker. The three sites are all based outside of the US, in the Isle of Man, Ireland and Costa Rica, respectively.
"As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some US banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits," Preet Bharara, the US attorney for the Southern District of New York, said in a statement. "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 charges allege that the poker companies used fraudulent methods to have US banks process payments which stemmed from online gambling.
The prosecutors are seeking to recover "at least" $3bn (£1.84bn) in civil money laundering penalties and forfeiture from the companies and their defendants.
Restraining orders have been issued against 76 bank accounts in 14 countries used by the companies and their payment processors. Five internet domains used by the companies to host their games were seized as well.
On Friday two defendants were arrested in Saint George, Utah and Las Vegas, Nevada and a third defendant is anticipated to appear for an arraignment on 19 April. The other eight defendants, including the three founders of the three poker companies, are not presently within the US, and so prosecutors are working with foreign law enforcement and Interpol to arrest them.
As of the introduction of the US Unlawful Internet Gambling Enforcement Act in 2006 it is a federal crime for gambling businesses operating in the US to accept forms of payment "in connection with the participation of another person in unlawful Internet gambling."
Defendants from Full Tilt Poker and Absolute Poker are alleged to have created a system whereby payments from US gamblers were disguised as payments to "hundreds" of non-existent online merchants — which purported to sell goods ranging from jewellery to golf balls — which were subsequently processed by US banks, according to the charges. The payments are on the order of "billions of dollars" of which a third or more went directly to the poker companies as revenue, the prosecution alleges.
Full Tilt Poker suspended US real money play — where the games involve government-backed currency — on Friday in response to the charges. The company is "saddened by today's charges" against its chief executive Raymond Bitar and believes " online poker is legal — a position also taken by some of the best legal minds in the United States," according to a statement.
PokerStars also suspended real money poker for US-based individuals as a consequence of the charges, but has assured players their balances are safe and that the company is still providing gambling services to those outside the US, according to the company's Twitter account.
Absolute Poker's domain has been seized by the FBI, according to a message on the site.
In September 2010 Sportingbet PLC, a UK-based online gambling company, began to co-operate with Bharara's office. According to a statement at the time, Sportingbet's cooperation involved providing the US government with documents and allowing employees to be interviewed by government investigators. Additionally, Sportingbet agreed to forfeit $33m in proceeds from providing gambling services to US customers.