Several founders of the three largest Internet poker companies doing business in the U.S. have been arrested as part of an indictment that includes charges of bank fraud, money laundering, and other online gambling-related offenses, the U.S. Attorney's office said today.
The three offshore companies--PokerStars, Full Tilt Poker, and Absolute Poker--are accused of circumventing a 2006 U.S. law that prohibits financial institutions from handling transactions for online gambling sites. Prosecutors say they allegedly tricked U.S. banks and credit card issuers into processing billions of dollars in transactions that appeared to be legitimate sales on hundreds of fake online retail sites purportedly selling jewelry and golf balls. One-third of the money allegedly went directly to the poker companies as revenue through a fee charged to players on each poker hand played, according to the indictment, which was unsealed today in U.S. District Court in New York.
After U.S. banks and financial institutions detected fraudulent bank accounts and shut them down, the defendants allegedly paid a few small, financially troubled banks money as investments in return for processing the payments, according to the indictment. The deals allegedly included a $10 million investment in a private Utah bank that gave the poker companies more than a 30 percent ownership stake, prosecutors said.
For more on this story, read Internet poker giants indicted in U.S. crackdown on CNET News.