Not that the first one wasn’t a gigantic, Shaquille O’Neal-sized boot, but since the indictments of eleven principals of the three largest U.S.-facing online poker rooms on April 15th, poker players have been wondering if the other shoe was going to drop. On Monday, it did, although nobody knows for sure how many feet the U.S. Department of Justice (DoJ) has left.
A federal grand jury for the District of Maryland handed down two separate, though virtually identical, indictments, charging two online gambling companies and three people with money laundering and conducting a gambling business. The first indictment named defendants ThrillX Systems Ltd., doing business as BetEd.com, along with principals Darren Wright and David Parchomchuk. The second named K23 Group Financial Services, doing business as BMX Entertainment, along with Ann Marie Puig.
Like on “Black Friday,” when the PokerStars.com, Full Tilt Poker, AbsolutePoker.com, and UB.com domain names were seized, so were online gambling sites seized in this case. Ten domain names were seized in all, including Bookmaker.com, 2Betsdi.com, Funtimebingo.com, Goldenarchcasino.com, Betmaker.com, Betgrandesports.com, Betehorse.com, and the most recognizable names of the bunch, Doylesroom.com, BetEd.com, and TruePoker.com.
While online poker room domain names were seized, it appears that the indictments stemmed from defendants’ involving in “illegal” sports betting, not poker.
Perhaps the most interesting aspect of the case is that Homeland Security Investigations (HSI) set up an undercover sting operation to gather evidence against the defendants. In a press release, it was revealed that HSI created a payment processing company called Linwood Payment Solutions in order to catch the offshore gambling companies doing business with U.S. residents.
As an example, the statement detailed that an online gambler, cooperating with investigators, opened an account on BetEd.com in late 2009 and deposited $500. In March 2010, the gambler initiated a withdrawal, upon which BetEd used Linwood Payment Solutions to process the transfer of $100 in winnings back to the gambler’s bank account.
Between December 2009 and January 2011, Linwood allegedly processed over 300,000 transactions totaling more than $33 million. Between February 2010 and January 2011, Linwood conducted wire transfers of over $2.5 million to bank accounts in Panama for BetEd.com. Between February 2011 and April 2011, K23 had Linwood send $91,000 to bank accounts in Portugal and Malta via wire transfer.
“It is illegal for internet gambling enterprises to do business in Maryland, regardless of where the website operator is located,” U.S. Attorney Rod J. Rosenstein said in the press release. “We cannot allow foreign website operators to flout the law simply because their headquarters are based outside the country.”
In addition to the seizure of the domain names, the indictment aims to grab the bank accounts used to process the gambling transactions. The defendants could face up to a maximum of 25 years in prison: five for operating a gambling business and 20 for money laundering.
This is not the first time Rosenstein has been involved in efforts to curb online gambling in Maryland. In March 2010, he was the central figure in the seizure of over $5 million in online gambling funds from 18 bank accounts, including accounts at Bank of America, Wachovia, Mercantile Bank, Wells Fargo, and Citibank. The funds were turned over to the Department of Homeland Security and U.S. Immigration and Customs Enforcement, two agencies also involved in this most recent indictment. While the seizures caused online gamblers headaches last year, the funds were eventually releases and returned to players.
In related news, Bradley Franzen, one of the eleven people named in the Black Friday indictments, pled guilty Monday to conspiracy to commit money laundering, conspiracy to commit bank fraud, and to accepting funds in connection with unlawful Internet gambling. This is a 180-degree turnaround from what he said the Monday after the indictments, when he pled not guilty in a Manhattan court. Franzen, identified as an intermediary between online poker rooms and payment processors, admitted that he knew what he was doing was against the law. “To avoid bank restrictions, they used shell companies and phony websites,” he said. Franzen will cooperate with investigators as part of his plea agreement.
Stay tuned to Poker News Daily for ongoing developments surrounding “Manic Monday.”
Hope they lock these greedy crooks up and shut these corrupt sites down
hope the merge gaming network is next. they were good until black friday now they’re the same bad beat bunch. Don’t want you to far ahead, they might have to pay out.
Too bad all this is happening. As usual, a good idea is turned to crap by greedy self-serving people who create and run these sites. It’s also too bad the US can’t negate the law preventing Casinos from starting their own US-based online poker sites. Even though its a pain with the regulation that will follow, it might be the best way to get back into online poker.
Get real another goverment controlled freedom.