April 18 (Bloomberg) -- Bradley Franzen, one of 11 people charged last week with being part of an online gambling conspiracy, pleaded not guilty 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.
Manhattan U.S. Attorney Preet Bharara 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, according to prosecutors.
“Not guilty, your honor,” Franzen told U.S. Magistrate Judge Frank Maas today in Manhattan after being asked how he pleaded to the charges.
Franzen was charged with nine counts, including conspiracy to violate the Internet Gambling Enforcement Act, operating an illegal gambling business and conspiracy to commit bank and wire fraud as well as being part of a money laundering conspiracy. If convicted of the charge of conspiracy to commit bank and wire fraud, he faces as long as 30 years in prison, prosecutors said.
Assistant U.S. Attorney Nicole Friedlander told Maas that Franzen surrendered to agents of the Federal Bureau of Investigation in New York this morning. Maas agreed to release Franzen on $200,000 bond secured by his parents’ home and their signatures.
“We’ll be reviewing the indictment and at this time we have no further comment,” his lawyer, Sam Schmidt, said after the hearing.
The indictment names two principals from each company and others who allegedly worked with them to illegally process payments.
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 the payments on their behalf. The government is seeking at least $3 billion in forfeitures and penalties.
The case is U.S. v. Scheinberg, 10-CR-336, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Patricia Hurtado in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Hytha at email@example.com