Individual accounts of online poker players were frozen after the indictment of Web gambling companies on charges of fraud and money-laundering and of running illegal casino operations.
About 76 bank accounts in 14 countries have been frozen, preventing players from accessing balances held by the online betting companies, said Kelly Langmesser, a spokeswoman for the FBI’s New York office. Eleven people were charged last week.
U.S. Attorney Preet Bharara in Manhattan and Janice Fedarcyk, the FBI’s assistant director in charge in New York, announced on April 15 a revised indictment against the founders of PokerStars, Full Tilt Poker and Absolute Poker. PokerStars, based on the Isle of Man, Ireland’s Full Tilt Poker and Absolute Poker of Costa Rica are the leading online poker sites doing business with U.S. customers, said prosecutors. Five sites displayed notices yesterday that the FBI had seized the domain names.
“These funds are currently being reviewed by the U.S. as part of an ongoing criminal investigation, and we are looking at the funds and accounts to determine if they are the profits of an illegal enterprise,” Langmesser said. “The funds won’t be available until a determination has been made.”
The investigation is focused on “the larger criminal enterprise of those who operate online Internet gambling sites and the individuals behind these sites,” said Langmesser of the Federal Bureau of Investigation.
Prosecutors allege that after the U.S. enacted a law in 2006 barring banks from processing payments to offshore gambling websites, PokerStars, Full Tilt and Absolute worked around the ban to continue operating in the U.S.
The poker companies named in the indictment are accused of using fraudulent means to circumvent federal laws and “trick” banks into processing payments on their behalf. The government seeks at least $3 billion in forfeitures and penalties.
The indictment names two principals from each company and others who allegedly worked with them to illegally process payments. A total of five domains were seized, according to Carly Sullivan, a spokeswoman for the U.S. Attorney in Manhattan. They are: Pokerstars.com, Fulltiltpoker.com, Absolutepoker.com, Ultimatebet.com and UB.com.
Bradley Franzen, one of 11 people charged last week, pleaded not guilty today before a U.S. magistrate in New York. Franzen, 41, of Illinois and Costa Rica, is accused of lying to banks about the nature of the transactions they were processing, and of creating fake companies and websites to disguise payments to poker companies.
Players who use the sites can’t be prosecuted under federal law and the U.S. states that have laws against making bets rarely use them against “mere customers,” said I. Nelson Rose, an Encino, California-based consultant to governments and industry on gambling laws.
“I’d say there’s a probably a better chance that they’ll win the World Series of Poker than that they will be arrested,” Rose, who doesn’t work for any of the companies named in the indictment, said today in a phone interview.
Sullivan didn’t immediately return a call regarding Rose’s comments after regular business hours yesterday.
Wynn Resorts Ltd. (WYNN), owner of Wynn and Encore casinos in Las Vegas and Macau, announced on March 25 an alliance with PokerStars, the world’s biggest online poker business, to seek U.S. legalization of Internet gambling. Wynn terminated the accord on April 15, said Michael Weaver, the company’s senior vice president of marketing strategy.
Fertitta Interactive, controlled by the owners of Station Casinos Inc., had been negotiating an alliance with Full Tilt Poker, Fertitta Interactive said in response to questions. The Wall Street Journal reported the talks last month.
‘Not a Deal’
“The deal between Full Tilt Poker and Fertitta Interactive was contingent upon pending federal poker legislation, our own internal due diligence, and gaming license approvals,” Fertitta Interactive said today in an e-mail. “There is currently not a deal in place as the exclusive negotiating period has expired.”
Caesars Entertainment Corp., the world’s biggest casino company, has led industry lobbying to legalize online poker in the U.S. Gary Thompson, a Caesars spokesman, declined to comment on the indictments.
Units of Caesars, formerly Harrah’s, operate real online gambling in the U.K. with partners who aren’t involved in the indictment, and recently reached licensing deals in Italy and France. The company also operates play-for-fun Internet poker elsewhere, including the U.S., according to Palansky.
Walt Disney Co. (DIS)’s ESPN sports cable channel said it will remove poker advertising and programming.
“We are aware of the indictment only through what has been announced publicly,” Bristol, Connecticut-based ESPN said in an e-mailed statement. “For the immediate future, we are making efforts to remove related advertising and programming pending further review.”
The case is U.S. v. Scheinberg, 10-cr-00336, U.S. District Court, Southern District of New York (Manhattan).