Three largest online poker sites shut down by FBI

Apr 15, 2011, 4:40 pm (48 comments)

Online Gambling

Executives indicted, arrested

The founders of the three largest online poker sites were indicted by the FBI on Friday in what could serve as a death blow to the thriving industry.

Eleven executives at PokerStars, Full Tilt Poker and Absolute Poker were charged with bank fraud and money laundering in an indictment unsealed in a Manhattan court. Two of the executives were arrested on Friday morning in Utah and Nevada. Federal agents are searching for the others.

Prosecutors are seeking to immediately shut down the sites and to eventually send the executives to jail and to recover $3 billion from the companies.  Prosecutors seized five Internet domain names used by the poker companies.  By Friday afternoon Full Tilt Poker's site displayed a message explaining that "this domain name has been seized by the F.B.I. pursuant to an Arrest Warrant."

The online gambling industry has taken off over the last decade, drawing an estimated 15 million Americans to bet online.

In 2006 Congress passed a law prohibiting online gambling. Most of the leading sites found ways to work around the law using foreign banks, but prosecutors allege that in doing so they broke the law.

Federal prosecutors in Manhattan have alleged the poker companies, which are located outside the U.S., tried to sidestep U.S. laws prohibiting banks and credit-card issuers from processing gambling payments by disguising billions of dollars from U.S. gamblers as payments to nonexistent online merchants for golf balls, jewelry, flowers and other merchandise.

After U.S. banks and financial institutions began detecting and shut down bank accounts used by the scheme in late 2009, prosecutors allege, a new strategy was developed in which two online poker websites allegedly persuaded a few small, local banks facing financial difficulties to process their payments in return for multimillion-dollar investments in those banks.

"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," said Preet Bharara, the U.S. attorney in Manhattan.  "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."

Representatives of PokerStars and Full Tilt Poker didn't immediately respond to requests for comment Friday. Contact information for Absolute Poker couldn't immediately be located.

Federal authorities also have filed restraining orders against 76 bank accounts in 14 countries allegedly associated with the poker companies and others as a part of a separate civil forfeiture action. They are seeking at least $3 billion in civil money-laundering penalties and forfeiture.

Friday's indictment and seizures mark the latest effort by U.S. authorities to crack down on online gambling. In recent years, some executives of overseas online-gambling firms have been arrested when they travel to the U.S.

In the latest indictment, U.S. prosecutors have alleged that the poker companies recruited third parties to open bank accounts and process "e-check" transactions using phony company names. Four men who allegedly acted as middlemen in collecting payments also have been charged.

About a third of the funds deposited by gamblers went to the poker companies as revenue, known as the "rake," prosecutors said. A rake refers to a percentage of a poker pot that is collected by a casino or online poker site after a player wins the hand. 

Poker fans took to Twitter in droves, worried about the money in their online gaming accounts, fretting that online poker's days were at an end.

"Well the good news is I think I only had about $300 left on the online poker sites overall," tweeted Jimi Schindler of Madison, Wis. "Maybe I'll see that money?!!?"

LA Times, Wall Street Journal, Lottery Post Staff

Comments

Stack47

Is it just a coincidence the Justice Department moved against the foreign online poker companies days after Washington D.C announced they were entering the online poker business?

As we speak, nobody residing in the U.S.A can play online poker for even 2 cents. What exactly is the difference between playing online from our homes and playing in a casino?

time*treat's avatartime*treat

Quote: Originally posted by Stack47 on Apr 15, 2011

Is it just a coincidence the Justice Department moved against the foreign online poker companies days after Washington D.C announced they were entering the online poker business?

As we speak, nobody residing in the U.S.A can play online poker for even 2 cents. What exactly is the difference between playing online from our homes and playing in a casino?

The difference is whether or not Unscrupulous Scam has figured out a way to get 40% of the take for doing 0% of the work.

JonnyBgood07's avatarJonnyBgood07

if i didn't know any better,I'd swear old sammy is trying like hell to turn america into a third world country...has anyone in congress  done  any estimates on how much potentially gets poured back into the economy from peoples won moneys? .... seeing as though they have an estimate for how many folks gamble onlineConfused.

dpoly1's avatardpoly1

New Black Panthers intimidate voters in Philadelphia in the 2008 Election & Eric Holder determines that there was no crime, but somebody actually stimulates the economy and they are arrested !?

 

........................... that is why many Patriotic Americans fly the "Don't Tread On Me" Flag!

 

US Flag

 

I have a friend that is a math genius ........ he earns allot of money from on-line poker ! Paying his way thru college without debt ............. but who would want that !!!!!!!!!!!!!!!!!!!!

Stack47

Quote: Originally posted by time*treat on Apr 15, 2011

The difference is whether or not Unscrupulous Scam has figured out a way to get 40% of the take for doing 0% of the work.

Sounds like the oil companies. I filled my car in December for $33 and for that today, I can get a little over half a tank of gas.

unseen's avatarunseen

OUCH.  I have a friend that plays at Full Tilt and he averages a good $1500-$4000 a month in extra income from poker.  He's going to cry when he hears this news.

Stack47

Quote: Originally posted by JonnyBgood07 on Apr 15, 2011

if i didn't know any better,I'd swear old sammy is trying like hell to turn america into a third world country...has anyone in congress  done  any estimates on how much potentially gets poured back into the economy from peoples won moneys? .... seeing as though they have an estimate for how many folks gamble onlineConfused.

The article estimates 15 million American online players. Who knows the amount of revenues being lost.

James1's avatarJames1

The sites are up and running just fine for me. 

Federal laws cease to amaze me. Greedy ba$tards !!

unseen's avatarunseen

this is what most people are getting.  You can log in but can't sit at a table to play

 

 

Stack47

Quote: Originally posted by James1 on Apr 15, 2011

The sites are up and running just fine for me. 

Federal laws cease to amaze me. Greedy ba$tards !!

The sites I saw are up and running fine too WITH NO U.S. PLAYERS.

When I tired to enter a tourney a pop-up said "Sorry, do to government regulations playing for real money is not allowed in your area".

joshuacloak's avatarjoshuacloak

illegal gambling profits

my beep,this is my issue with govt, its not illegal to spend our money however we want......, its just govt being a biggest jerk on the block , aka a evil dictatorship of the rights of their own people.

how is it anyone else's business as americans  in united states What i do with my own money????

None, you all have no business in my business onless am harming you somehow......

onless am hiring a freaking hitman or something etc         , Ever other american has no business telling Me/you  how to spend my/your  money, let alone your united states representatives, aka congress who you put in power

so this is bullcarp law agiant  online gambling,but then  and they know it, you know it

congress needs to back off and learn to stfu and gtfo of everyone business

Jordans121's avatarJordans121

there are more worse things happening in the world than trying to indict an online poker site. I NEED TO MOVE TO CANADA!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I'm sick and tired of these federal Bullies spending our tax dollars on this type of ####!! Try catching the man that is killing people in NewYork, you <snip>s!!!!!

This post has been automatically changed by the Lottery Post computer system to remove inappropriate content and/or spam.

baky

bam bo kla

fxsterling

back door way of getting taxes

Subscribe to this news story