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:
- Bookmaker.com
- 2Betsdi.com
- Funtimebingo.com
- Goldenarchcasino.com
- Truepoker.com
- Betmaker.com
- Betgrandesports.com
- Doylesroom.com
- Betehorse.com
- Beted.com
Thanks to four4me for the tip.
It just kills the feds to know people are making money and they're not confiscating half of it off the top before they ever get to see it.
Drives 'em absolutely nuts.
They handled 33 million in transactions and seized 11 bank accounts.
Doesn't really say what they netted.
That's what I'm saying. They had to make a profit from the 33 million in transations. Just saying.
I'd say you're right.
Making (confiscating) money is Job One with the feds.
To me, it appears the Feds screwed up and this operation was a big mistake. TWO YEARS of running a huge fake banking scheme, and they have zero arrests. Just indictments. Seems to me the biggest losers are not the offshore companies that lost some pretty worthless domain names, but the average citizens who apparently are losing all their money that they wagered.
I wish the Feds would just cut it out, and stop mucking around with the Internet. Or, if they're going to insist on mucking around with the Internet, how about just focusing on child predators or something truly vile? Or how about sticking to tracking terrorists using the Internet to communicate?
I'm really sick of the fact that people who simply want to spend their money as they choose is being considered a crime. How about cracking down on something that INFRINGES on liberty, and stop cracking down on people EXPRESSING their liberty.
I totally agree with you.
amazing , yet they cant stop the influx of cocaine thats coming into the united states borders via miami and mexico.......wooooooooooooooow !!!
The story says $33 million in transactions, not 33 million transactions.
That means people are out $33 million because of the fake banking scheme created by the Feds.
Yep, sounds like one of their Keystone Kops operations.
But as always, even though the only ones hurt were American citizens, in their minds, it's the thought that counts.
Yes, all incompetence and failure aside, they meant well.
Promotions all around!
I forgot the dollar sign.
Couldn't have said it any better!
Also stop all the illegal alians that are coming into the U.S. that's costing us more than any $33 million internet gambling site.
Theres one glaring fact no one has thought of, this was Done by Homeland security and immigration, They spent all this time, man hours, money, to catch gamblers and still our borders are under protected, especially in Arizona. Oh thats right they got 33 million, silly me. I feel so much safer knowing those hardened poker players are of the internet, We need people with common sense, Todd your in Jersey, you think you can talk Christie into running.
Isn't the real motive to stop the gambling because they can't get a piece of the pie?
I'm sure that's some of it, but the real motivation behind what the Feds decide to do is two-fold: They want "wins" and they want those wins to be supporting their political agenda.
The "wins" are important to the "troops" who investigate and carry out the operations, because they are career workers.
The political agendas are important to the people authorizing the operations: the political appointees of the administration. The priority for things they decide to go after are set from the highest levels of the Justice Department - namely, Eric Holder. The two-year operation means that the operation was started under Holder. Certainly he would have direct knowledge, given the scope of the effort.
If there is a financial aspect, that would likely be driven by the politicians who care about revenues the most, which would be Congress. I'm sure they do apply pressure, but probably not as much as the two things I've mentioned here. More likely, the pressure from Congress would be centered on getting rid of independent competition in preparation for certain members of Congress trying to insert the US government as sole arbiter and provider of online gambling. Ultimately it comes down to money, but indirectly at this point.
Thanx, I see you did your homework on this....
Seems like the real problem is the fact that maryland has tryed 2 stay away from any form of legal gambling and this just shows that it is a market for all types of betting . Our racetracks lose every day because we want 2 control the money going in and out of the few off track betting keno and pcik 4 pick 3 match five mega millions powerball and rub of tickets . We r so in the dark ages in this town . I think all the bettors should at least get back the money that they used 2 fund their account
Idea maybe ???
Evelyn
thanks 4fourme glad 2 see we r on the same page
The most important thing you can do is remember this on election day.
From DC to your state and local government, find out who supports this BS and get rid of them.
Todd For President!!