A Closer Look at the Department of Justice IndictmentThe 11 Defendants Are Facing Decades In Prison and Seven-Figures In Fines If Convicted |
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The initial shock of the Department of Justice’s indictment of the major online poker sites has more or less worn off, but the allegations remain for those 11 site representatives charged with numerous counts of bank fraud, money laundering and illegal gambling offenses.
It’s important to note, however, that these alleged crimes do not stem from PokerStars, Full Tilt Poker, UB and Absolute Poker’s ability to offer real-money online poker to U.S. citizens. Playing online poker in the United States is not a crime, but according to the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) it is illegal for these sites to have knowingly accepted payments or deposits for hosting these games.
As a result, these online poker sites allegedly utilized methods that included deceiving various banks and payment processors and later, bribing them into cooperating. According to the press release issued by Preet Bharara, U.S Attorney for the Southern District of New York, each of the 11 defendants are facing charges for a myriad of crimes including violation of the UIGEA, operation of an illegal gambling business, money laundering and conspiracy to commit bank and wire fraud.
“As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits,” said Bharara. “Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”
Janice Fedarcyk, FBI Assistant Director-in-Charge, added, “These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”
If convicted, Isai Scheinberg, Ray Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie and John Campos could be facing decades in prison and combined fines well into the seven-figures. In addition, the indictment seeks roughly $3 billion in civil money laundering penalties and revenue forfeiture from the sites themselves.
Terrence Chan, a poker professional who used to be employed by PokerStars, had this to say about one of the defendants in his blog. “Unlike many people in poker, I actually know Isai Scheinberg. He’s a good man. He’s not a scheming underworld criminal. Yes, he’s a businessman, and yes, he was a tough and demanding boss. But I also know he always ran the company with fairness and honesty. I was in the room when he made tough decisions because they were the right thing to do. Isai was definitely about doing the right thing, and he’d do it even if no one would ever know about it. On top of that, he often told me that he wanted PokerStars to run towards regulation, not away from it. He wanted to work with governments. There would be subsequent proof of these words in the creation of pokerstars.fr and pokerstars.it, sites that are regulated in their respective countries. All he — and thus PokerStars — wanted was an opportunity to do what they do best: provide a place for millions of people worldwide to play poker. And at least partially because he did it better than anyone else, today he is staring down the barrel of a federal indictment.”
Though there is no denying the seriousness of the allegations, one can’t help but wonder if their actions were commonplace in a market with a booming demand in a country lagging behind others in establishing regulations. These sites simply could have packed up shop after the passage of the UIGEA, a measure that was sneakily added at the last moment to the SAFE Port Act, and one that PokerStars and other sites believed to be legally flawed. Is it not true that these defendants were simply finding a way to keep their U.S. players happy, as well as turn a substantial profit?
Campos and Elie were arrested in Utah and Nevada on the morning of the indictment. Campos was released Monday on $25,000 bail and Elie was released Tuesday on $250,000 bail.
Franzen turned himself into the FBI on Monday, plead not guilty and was then released on $200,000 bail. The U.S. Attorney’s Office is working with foreign law enforcement agencies and Interpol to arrest the other eight defendants and will extradite those located abroad if needed.
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