Judge Laura Swain handed down a ruling in the Costigan Media online poker case on Tuesday, although its contents had not yet been released. Her decision may have been influenced by the indictment of Douglas Rennick by the Southern District of New York. Costigan Media, the parent company of Gambling911, is seeking to unseal the warrants and affidavits related to the seizure of more than $30 million destined for over 24,000 online poker players in June.
Rennick was indicted last week for opening bank accounts under the names KJB Financial Corporation, Account Services, My ATM Online, Alenis Limited, and Check Payment Financial and using them for online poker and casino payouts. The indictment explains that Rennick told bank officials that he would use the accounts for transactions like rebate checks, sponsorship payments, and “minor payroll processing.” One of his companies, Account Services, filed a motion for the return of property, namely $14 million held in Wells Fargo and Union Bank accounts in California seized by the U.S. Government.
A letter sent by attorneys for Costigan Media to Judge Swain focuses on Rennick’s involvement with Account Services. It asserts, “We bring the indictment to your attention because it suggests that there is no longer a need on the part of the Government to keep the seizure warrant documents sealed. The filing of the indictment also changes the constitutional setting for the motion to unseal… All courts agree that there is some right of access post-indictment.” Baruch Weiss of New York-based Arent Fox authored the letter, which is dated August 6th.
Attached to the letter is a copy of the indictment and the press release distributed by the Southern District of New York. The latter document notes that the Government began tracking Rennick in 2007 and asserts, “Rennick and his co-conspirators provided false and misleading information to United States banks about the purpose of the accounts because the banks would not have processed the transactions had they known they were gambling-related.” More than $350 million was transferred from a bank in Cyprus to accounts in the United States in order to process payments “from offshore internet gambling companies that offered… poker, blackjack, slots, and other casino games.”
Rennick was charged with one count of bank fraud, one count of money laundering, and one count of illegal gambling. The bank fraud charge carries a maximum of 30 years in prison and a $1 million fine. The money laundering count carries a maximum of 20 years behind bars and a $500,000 fine. The illegal gambling charge carries a maximum of five years in jail and a $250,000 fine. The Government is also pressing for the return of $565 million, which it claims “represents the proceeds obtained as a result of the illegal gambling and bank fraud conspiracies.” The case was assigned to Judge Sidney Stein.
The response by the Government to Costigan Media’s motion to unseal the warrants and affidavits associated with the seizure revealed, “The Government… is actively investigating matters discussed in the affidavits that Costigan seeks to unseal. Under these circumstances, granting Costigan’s motion would be unprecedented.” FBI Special Agent Dana Conte swore to the affidavits used to seize funds from Union Bank and Wells Fargo branches in California. Judge Theodore Katz issued the warrant for the Wells Fargo funds, while Judge Henry Pitman issued the warrant for Union Bank.
Judge Swain had originally indicated that she would hand down a ruling last week. Weiss told Poker News Daily that he received a copy of Judge Swain’s decision on Tuesday around Noon ET, but had not yet read through it. We’ll have a full update as it becomes available.
