Internet Poker Companies Indicted for Fraud, Money Laundering

April 15, 2011 -- The owners and founders of the three largest online gambling sites in the United States have been indicted and charged with bank fraud, money laundering and illegal gambling offenses.

Eleven individuals were charged over their involvement running PokerStars, Full Tilt Poker and Absolute Poker for violating the 2006 Unlawful Internet Gambling Enforcement Act.

According to a federal indictment, the owners of the companies sought ways to get around restrictions placed on U.S. banks that prohibited them from handling financial transactions connected to online gambling.

"Some of the defendants found banks willing to flout the law for a fee," Janice Fedarcyk, the assistant director in charge of the FBI's New York Field Office, said in a prepared statement. "The defendants bet the house that they could continue their scheme, and they lost."

The Justice Department has filed a civil complaint for money laundering that seeks $3 billion being held by the companies.

Federal prosecutors and FBI agents also have obtained a district court order to block 76 bank accounts and five Internet domain names associated with the poker websites.

"This is a potentially game-changing moment for the online poker industry, as PokerStars and Full Tilt are, by quite some distance, the two largest operators not just in the U.S., but globally," James Kilsby, Americas editor with the business intelligence service GamblingCompliance, told ABC News.

"Previous DOJ enforcement efforts have honed in on sports betting operators and payment companies," Kilsby said. "Meanwhile, some of the poker operators themselves have claimed that U.S. gambling laws do not apply to poker. It seems clear from today's action that the Justice Department doesn't agree."

Isai Scheinberg and Paul Tate of PokerStars, Scott Tom and Brent Beckley of Absolute Poker, and Raymond Bitar and Nelson Burtnick of Full Tilt Poker, the indictment claims, engaged in a scheme "to deceive United States banks and financial institutions into processing billions of dollars in payments for the poker companies, by, among other things, arranging for the money received from United States gamblers to be disguised as payments to hundreds of non-existent online merchants and other non-gambling businesses."

The indictment alleges the poker-company owners "relied on highly compensated third party payment processors ... who lied to United States banks about the nature of the financial transactions they were processing and covered up those lies through the creation of phony corporations and websites to disguise payments to the poker companies."

The allegedly phony websites included online flower delivery shops and pet supply stores that would handle credit card payments to get funds from U.S. customers.

The 52-page indictment also alleges that conspirators used electronic checks to try and disguise their payments.