Over $30 million belonging to at least 24,000 online poker players has been frozen by the U.S. Attorney for the Southern District of New York, according to statements released by the Poker Players Alliance (PPA) and Associated Press.
The seizure of funds, according to the PPA statement, is a result of violations of the Wire Act of 1961 and the Illegal Gambling Business Act. The former has traditionally applied to online sports books. A Southern District judge issued a warrant for “an account at a Wells Fargo bank in San Francisco and a federal prosecutor told a bank in Arizona to freeze an account,” according to the Associated Press. On June 4th, a total of $19 million was frozen in banks in Scottsdale and Los Angeles and, as the PPA explained, “It is important to underscore that in at least two cases, the prosecutor acted and the banks responded without a warrant being issued.”
None of the Southern District Court’s actions appear to come as a result of the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in the waning moments of the 2006 Congressional session at the urging of then-Senate Majority Leader Bill Frist (R-TN). The PPA released a statement late Tuesday afternoon noting, “The PPA is disappointed that this unprecedented action has been commenced against law abiding poker players. The payment processor funds frozen by the Southern District of New York belong to individual poker players – not operators of poker websites – and do not represent the proceeds of any gambling activity, much less illegal gambling activity.”
Assistant U.S. Attorney Arlo Devlin-Brown sent a letter on Friday to Alliance Bank of Arizona calling for the seizure of accounts held by the payment processor Allied Systems. In response, the PPA sent a letter yesterday to the Assistant United States Attorney for the Southern District Court requesting to be involved in the process going forward. The PPA has over one million members in total and is fresh off a victory in Minnesota, where the state’s Department of Public Safety rescinded an order to block access to 200 internet gambling domain names by its residents.
The PPA added that the organization has been in contact with the online poker sites whose checks have bounced and has been told that all players will be reimbursed. A member of the Poker News Daily staff received a check from PokerStars dated June 1st backed by a bank in California that cleared three days later without incident. PokerStars currently offers eChecks for depositing and withdrawing. Paper checks are the site’s only other method of cashing out for players from the United States. Paper checks are available for all denominations and sent by first class mail or courier service within 15 business days. Full Tilt Poker also offers eChecks.
According to the Associated Press, a federal prosecutor claimed that the funds in question were seized “because they constitute property involved in money laundering transactions and illegal gambling offenses.” When prompted for comment by Poker News Daily, PokerStars Press Office Donna McLoughlin responded, “PokerStars has not made any comments on this matter thus far. I don’t have any more information for you, I’m afraid.”
Meanwhile, members of the online poker community are reacting to the news. On PocketFives.com, one poster expressed his outrage at the lack of a clear response from PokerStars, the world’s largest online poker site: “The payment processor where I got my Stars check from is part of this. Stars won’t really give me a straight answer.” Rich “TheEngineer” Muny commented on the same forum, “PPA will stand strong here. We have a nice record to date of winning in courts and we’re not planning to start losing now.”
In 2007, a similar occurrence involved Neteller. In July of that year, the company reached an agreement with the United States Attorney’s Office for the Southern District of New York to return frozen money to players. Approximately $60 million was seized; Neteller quickly exited the U.S. market and agreed to pay a $136 million fine. In January of 2007, Neteller founders John LeFebvre and Steve Lawrence were arrested on U.S. soil, which set off the funds seizure.
Stay tuned to Poker News Daily for the latest on this breaking news story.
Poker News Daily columnist Sean Gibson contributed to this report.