A German national residing in Naples, Florida was arrested last month for running online gambling payment processing businesses out of his home. According to the criminal complaint filed in the United States District Court for the Middle District of Florida, 29 year-old Michael Olaf Schuett “did knowingly conduct, control, manage, supervise, direct and own an unlicensed money transmitting business.”
In fact, Schuett owns hundreds of business, nine of which are tied to payment processing. Those nine are MCM Capital Management Corp, MI Global Inc., South Naples Escrow Co., Southwest Florida Payroll Co., Woodhouse Systems, Mathew’s Trade Corp., and Internet Payment Services Group Inc. Schuett would receive wire transfers from two companies – the British Bluetool Ltd. and the German International Payment Systems – and then send cashier’s checks, personal checks, or wires to customers located in the United States and Canada. While the exact composition of Schuett’s customer base is not exactly known, it is presumed that most, if not all, of his customers are online gamblers.
It was the suspicion of shipping companies and bank employees that eventually led to Schuett’s arrest. Examples of activities that raised red flags included:
- Schuett’s shipping of over 150 FedEx parcels from his home every week. FedEx employees opened some of the packages and discovered that each contained a check.
- Unusually high volume of wire transfers going in and out of Schuett’s bank accounts, all with overseas companies.
- Some bank customers who attempted to cash checks written from an MCM Capital account told bank officials, when asked, that the checks were proceeds from playing online poker.
- Schuett told employees at one bank he used, Shamrock Bank, that his new account was to assist German nationals in purchasing real estate in Florida. The account’s activity was not consistent with what would normally be associated with real estate transactions.
All told, Schuett filtered millions of dollars from online gambling companies through his companies and bank accounts to customers in North America. An example of the sheer dollar volume involved can be seen with his Bank of America accounts. Since November 1st, 2007, Schuett opened approximately 40 accounts at the large national bank and transferred approximately $70 million in and out of them to about 23,000 customers.
Schuett is specifically charged with violating United States Code Title 18, Section 1960, which in part states, “whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.”
He is currently being held without bond in Lee County jail. Judge Sheri Polster Chappell denied bond because she believed Schuett could be a flight risk, as his visa expires in April, he is a German citizen, and he has no employment in the United States. In addition, one of the few reasons that someone might stay in the country, a spouse, may not be significant in this case. Schuett has only been married to his wife, 28 year-old Jennifer Sherman, for one month and has only known her for nine months.
Naturally, concerns have been raised within the online poker community about what this means for players looking to receive funds from poker rooms. In the long-run, many speculate that there will be no negative effect. Other poker rooms have experienced troubles with their payment processors in the past, and while it does create payout delays in the short-term, they typically find other processors.
What could result is the notion that payment processors, which poker players imagine to be “legitimate” companies, could really just be individuals receiving money from poker rooms and mailing checks to players from their own residences.
