Although it seems as if it were an eternity ago, the actions of “Black Friday” – the indictment of several of the top players in the online poker industry and banking executives who handled the money – are only a scant 2½ years in the poker world’s rearview mirror. At a conference earlier this week in Las Vegas, a key whistleblower for the federal government told her side of the sordid “Black Friday” story and how it could even still be occurring today.
The Association of Certified Anti-Money Laundering Specialists held a conference on Monday this week with one of its premiere speakers, Cathy Scharf, discussing her work with SunFirst Bank in Utah. SunFirst Bank, as many may remember, was the major player in processing transactions for private online poker sites such as Full Tilt Poker and PokerStars. In regaling the bankers in attendance with her story, Scharf also offered a look at what drove the institutions and online sites to take such actions, actions they knew were of questionable legality.
Following the collapse from the Recession of 2008, Scharf took a position with SunFirst Bank and moved to its headquarters in St. George, UT, from Las Vegas. Oddly enough, Scharf was brought in to keep the bank in compliance with the different banking laws but, only a week into the job, she was able to see just what was going on in the company.
“They just told me (about the illegal gambling processing),” Scharf informed the bankers in the seminar. “Also, I could see from the stacks of slips going in and out.” Most of the money for Full Tilt and PokerStars allegedly went through this Utah bank, which made approximately $400,000 per month in transfer fees while the poker sites took in an estimated $200 million.
Scharf was told by the upper management of SunFirst that, without the transactions, the bank would fail and went as far as using attorneys to threaten her with her own arrest if she didn’t work with them. Flying in the face of such actions, Scharf instead began to document the actions performed at the bank, hired her own attorney and began to work with federal law enforcement agencies. The end result: John Campos, the vice chairman of the board and part owner of SunFirst Bank, was one of the first of eleven men indicted on “Black Friday” to be arrested; in March 2012, he pled guilty to a misdemeanor bank gambling charge and was sentenced to three months in prison.
Many of those who heard Scharf’s story applauded her actions and pointed out how it has helped the banking community. “She stopped potentially hundreds of millions of dollars that were coming through that bank and she tightened up the industry as a result,” Daniel Wagner, the head of due diligence at TD Bank in New York, said to Associated Press writer Hannah Dreier. Others pointed out how difficult it was for her, with the threats from the bank’s legal representation, and were surprised at how well the government authorities and their legal teams were able to keep her from harm’s way.
The potential bombshell of Scharf’s story to the conference was that she believes there is still a great potential that other banks are still doing such transactions as SunFirst had done. While the banking industry and federal regulators have tightened up international transactions such as those performed by SunFirst, Dreier points out that there are still a host of online gaming sites that still offer casino action, including poker, to American players. If those banks are U. S. based, they would be violating the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2006, which put restrictions on banking transactions for financing online gambling.
Scharf’s story is one that needs to be told in the saga that has become known as “Black Friday” and, as suggested by her and Dreier, it is too likely that similar situations are occurring even now – they just haven’t been exposed. “After all, banks need deposits,” Dreier surmises.
