A Canadian man charged with conspiracy and bank fraud for allegedly laundering $350 million for foreign Internet gambling companies pleaded guilty to a single count of processing offshore bets of U.S. citizens.
Douglas Rennick, 35, who was indicted in August, entered his guilty plea today in federal court in New York. Michael Pancer, a lawyer for Rennick, said in court that his client agreed to forfeit $17.1 million and could face a prison term of six to 12 months when sentenced on Sept. 15.
When asked by U.S. District Judge Sidney Stein to describe his crime, Rennick said, “I had a business that transferred money from offshore gaming sites to American players within the Southern District of New York.”
He was charged with transferring the money from a Cyprus bank to U.S. accounts to pay Americans who wanted to cash out their gambling winnings from 2007 through June of last year, said prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan.
Rennick and his co-conspirators were accused of providing false and misleading information to U.S. banks about the nature of payments being processed by companies under Rennick’s control, prosecutors said in the indictment.
Pancer and Gerald Lefcourt, a second lawyer for Rennick, declined to comment after court today.
In 2006, U.S. prosecutors charged executives and employees of the London-based online-gambling company Betonsports Plc. Gary Kaplan, the company’s founder, ex-Chief Executive Officer David Carruthers and former employee Tim Brown were convicted in the case. Four members of the family that owned a Florida-based marketing company that promoted Betonsports in the U.S. also were convicted.
Rennick and his co-conspirators told the U.S. banks the accounts would be used for rebate checks, refund checks, payroll processing and other legal purposes, the government said. He laundered the money for Internet-gambling companies that offered poker, blackjack, slots and other games, prosecutors said in the indictment.
Rennick operated through companies he controlled including My ATM Online, KJB Financial Corp., Account Services Corp. and Check Payment Financial Co., the government said.
Possible 30-Year Term
He was charged with conspiracy to commit bank fraud, conspiracy to engage in money laundering and conspiracy to operate an illegal gambling business.
A bank fraud conviction could have brought a prison sentence of as long as 30 years and a maximum fine of $1 million. Prosecutors are seeking a total of $565.9 million in forfeitures in the case, said Assistant U.S. Attorney Arlo Devlin-Brown. That’s the amount obtained as a result of the illegal conspiracies, Devlin-Brown told Stein today.
Rennick, who lives British Columbia, Canada, was permitted to remain free on $400,000 personal recognizance bond, Stein said.
In a related ruling, a federal appeals court in Manhattan upheld a contempt order against two companies Rennick owned. The U.S. Court of Appeals in Manhattan ruled in February that Rennick had to surrender records he’d refused to turn over to the government, saying they’d implicate him in criminal wrongdoing,
The government said in court papers they sought the documents as part of an ongoing federal investigation into “illegal” online gambling businesses that operate offshore.
Last month, prosecutors in Bharara’s office charged Daniel Tzvetkoff, an Australian man, with illegally processing more than $500 million in transactions between gamblers and Internet betting sites.
Tzvetkoff is accused of transferring gamblers’ payments from their U.S.-based checking accounts through the Automated Clearing House, or ACH, system. Tzvetkoff wired the money offshore, and encouraged U.S. banks to use the ACH system by making the transactions appear to be unrelated to gambling, prosecutors said.
He has pleaded not guilty to the charges and U.S. District Judge Lewis Kaplan ordered Tzvetkoff held without bail, concluding he was a flight risk.
The case is U.S. v. Rennick, 09-cr-00752, U.S. District Court, Southern District of New York (Manhattan).