APNewsBreak: Group Says Poker Winnings Are Frozen

An advocacy group for online poker said Tuesday that the federal government has frozen more than $30 million in the accounts of payment processors that handle the winnings of thousands of online poker players.

The Justice Department long has maintained that Internet gambling is illegal, a view that the poker group challenges.

The Poker Players Alliance told The Associated Press that the U.S. attorney for the Southern District of New York instructed three banks — Citibank, Goldwater Bank and Alliance Bank of Arizona — to freeze the accounts.

Documents obtained by the AP show that a magistrate judge in the district issued a seizure warrant last week for an account at a Wells Fargo bank in San Francisco, and that a federal prosecutor told Alliance Bank to freeze accounts.

In a letter dated Friday and faxed to Alliance Bank, the prosecutor said accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture "because they constitute property involved in money laundering transactions and illegal gambling offenses." The letter was signed by Arlo Devlin-Brown, assistant U.S. attorney for the Southern District of New York.

In another letter faxed the same day, Devlin-Brown asks that the bank treat the funds "as legally seized" by the FBI, saying that the government has probable cause that the gambling payments of U.S. residents had been directed to offshore illegal Internet gambling businesses.

"The FBI has authority to seize proceeds of specified unlawful activity without a warrant under exigent circumstances," wrote Devlin-Brown — a process criticized by the Poker Players Alliance.

In addition, a grand jury subpoena issued last week to Allied Systems seeks communications, financial transactions and processing services between the company and Internet gambling operations. The subpoenas also seek corporate records and bank accounts.

A spokeswoman at the Southern District declined to comment.