Phony company was set up to catch illegal betting businesses
Federal investigators in Baltimore set up a phony business — and handled $33 million in transactions from Internet gamblers — in a lengthy sting operation that led to the indictment of two online betting companies and their international owners.
Details were released Monday after 11 associated bank accounts were seized in five countries and 10 web domain names were shut down.
"It is illegal for Internet gambling enterprises to do business in Maryland, regardless of where the website operator is located," Maryland U.S. Attorney Rod J. Rosenstein said in a statement Monday. "We cannot allow foreign website operators to flout the law simply because their headquarters are based outside the country."
The Maryland indictments, returned late last month, are the result of an undercover operation by Homeland Security Investigations in Baltimore, a division of U.S. Customs and Immigration enforcement.
The agency created a payment-processing business — called Linwood Payment Solutions — and used it to infiltrate the world of online betting.
The company is described online as 10 years old, with 15 employees and annual sales of $760,000. A half-dozen Internet gambling companies ultimately relied on it to handle $33 million in transactions over the past two years, revealing a thriving criminal community in Maryland and beyond.
"There are numerous individuals in Maryland who have authorized payments to these [foreign] businesses," claims one agent's sworn affidavit, filed with court records.
Charged in the indictments are ThrillX Systems Ltd. and owners Darren Wright and David Parchomchuk, both of British Columbia, Canada; and K23 Financial Services (known as BMX Entertainment), run by defendant Ann Marie Puig, of San Jose, Costa Rica. They're all charged with running an illegal gambling business and money laundering through various websites seized Monday, including Truepoker.com and Funtimebingo.com.
Banners saying the websites had been shut down were expected to replace the pages Monday, though they had not yet been posted by Monday evening.
The defendants did not return messages left with their companies.
Similar indictments were unsealed in Manhattan federal court in mid-April, charging 11 defendants, including the founders of the three largest Internet gambling sites operating in America. Earlier this month, the U.S. Attorney for the Southern District of New York announced that one of the defendants, Absolute Poker, had agreed to shut down U.S. operations and attempt to return player deposits.
The money made from illegal Internet gambling often funds organized crime, William Winter, the special agent in charge of the Homeland Security Investigations in Baltimore, said in a statement.
"Together, with our law enforcement partners, we will disrupt and dismantle organizations that commit these crimes, regardless of their location," Winter said.
Court records claim that ThrillX and K23 run illegal gambling businesses based outside the U.S., but that they mostly deal with American customers, relying on third-party "payment processors" to move money between their companies and the gamblers.
Investigators designed Linwood to act as a processor, giving it a website and a staff of undercover Homeland Security Investigations agents tasked with gaining "person-to-person contact with top managers of gambling organizations," prosecutors said in a statement.
They declined to discuss the phony company further.
A call to Linwood wasn't answered Monday. The covert company claims to have "over 10 years of team industry experience" on its web page — paymentprocessingsolutions.com — and to specialize in "global transaction processing" among other things.
A business status report from the New Jersey Treasury Department says Linwood was incorporated in Utah.
Agents claim that Linwood processed gambling transactions for the defendants using banks in Portugal, Malta, Panama, The Netherlands and the United States — more than 300,000 transactions in a two-year period. The bank accounts were seized.
If convicted of running an illegal gambling business, the defendants face a maximum of five years in prison. Money laundering carries a maximum sentence of 20 years.
The following Internet domain names will be seized pursuant to federal court order:
Thanks to four4me for the tip.