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In 2006, the United States Congress pass the Unlawful Internet Gambling Enforcement Act that essentially made it illegal for online sites to do online gambling transactions through U.S. banks. For years, online sites have been finding ways to circumvent these laws while pushing for online poker legislation. It appears that their time has run out.

Earlier Friday, the US Department of Justice unsealed an indictment against 11 defendants and have seized five internet gambling domains. In addition, over 75 different accounts linked to online gambling have been seized. They also filed a civil suit outlining the penalties they would like imposed on the sites and defendants in the indictment.

The Defendants

The following are the list of defendants in the case:

Isai Scheinberg – Founder, owner, and principal decision-maker for PokerStars

Raymond Bitar – Founder, owner, and principal decision-maker for Full Tilt Poker

Scott Tom – Co-founder and principal decision-maker for Absolute Poker and UltimateBet

Brent Beckley – Co-founder and principal decision-maker for Absolute Poker and UB

Nelson Burtnick – Former executive in payment processing departments at PokerStars and Full Tilt Poker

Paul Tate – Former PokerStars employee and head of payment processing department

Ryan Land – served as payment processor middle-man between online poker sites and payment processors.

Bradley Franzen – served as payment processor middle-man

Ira Rubin – processed payments for various sites by using phony internet merchants

Chad Elie – opened bank accounts in the US that was used to receive payments for online poker sites

John Campos – part owner of SunFirst Bank which processed payments for Full Tilt Poker and PokerStars

In addition, the following websites have been seized by the U.S. Government. When you go to the sites, you will either be redirected to another site or a DOJ image will appear on the site:

* PokerStars.com
* FullTiltPoker.com
* AbsolutePoker.com
* Ub.com
* Ultimatebet.com

PokerStars and Full Tilt Poker are still reachable at present by web browser, but ub.com and absolutepoker.com display the DOJ seizure image.

Charges Presented Against Defendants

There are a total of nine counts presented in the brief against the defendants. The nine counts and their penalties are as follows:

Count 1 – Conspiracy to Violate the UIGEA – All eleven defendants are charged with this. They could face 5 years each and a fine of either $250,000 or twice the gain or loss received. They must then serve 3 yeas of supervised release.

Count 2 – Violation of the UIGEA – PokerStars – All defendants except Bitar, Scott, and Beckley face this charge. The penalties are the same as count 1.

Count 3 – Violation of the UIGEA – Full Tilt – Bitar, Burtnick, Lang, Franzen, Rubin, Elie, and Campos face this charge.

Count 4 – Violation of the UIGEA – Absolute Poker – Tom, Beckley, Lang, Franzen, Rubin, and Elie face this charge.

Count 5 – Operation of Illegal Gambling Business – PokerStars – Same defendants as count 1. The penalties are the same as counts 1 through 4 with the additional penalty of forfeiture of proceeds of offense.

Count 6 – Operation of Illegal Gambling Business – Full Tilt – Same defendants as count 2. Same penalties as count 5.

Count 7 – Operation of Illegal Gambling Business – Absolute Poker – Same defendants as count 4. Same penalties as count 5.

Count 8 – Conspiracy to Commit Bank Fraud and Wire Fraud – All defendants but Tom and Campos face this charge. This charge carries up to 30 years in prison, a fine of $1 Million or twice the gross gain or loss. There is also a 5 year supervised release period from this charge as well as forfeiture of proceeds form the offense.

Count 9 – Money Laundering Conspiracy – All defendants face this charge. This carries up to a 20 year prison term, and either a fine of $500,000 or twice the amount laundered. There is a 3 year supervised release period as well as forfeiture of all proceeds from the offense.

What the Government Wants

First and foremost, the U.S. Government wants to receive $3 Billion from the sites as a results of operations in the United States. This breaks down as $1.5 Billion from PokerStars, $1 Billion from Full Tilt, and $500 Million from AP and UB.

In addition, the government wants all defendants rights, title, and interest in the following entities and businesses:

* PokerStars
* Full Tilt Poker
* Absolute Poker
* Ultimate Bet
* Oldford Group Ltd.
* Rational Entertainment Enterprises Lt.d
* Pyr Software Ltd.
* Stelekram Ltd.
* Sphene International Ltd.
* Tiltware LLC
* Kolyma Corporation A.V.V.
* Pocket Kings Ltd.
* Pocket Kings Consulting Ltd.
* Filco Ltd.
* Vantage Ltd.
* Ranston Ltd.
* Mail Media Ltd.
* Full Tilt Poker Ltd.
* SGS Systems Inc.
* Trust Services Ltd.
* Fiducia Exchange Ltd.
* Blue Water Services Ltd.
* Absolute Entertainment, S.A.
* Blanca Games, Inc of Antigua

The government also wants to seize domain names pokerstars.com, fulltiltpoker.com, absolutepoker.com, ultimatebet.com, and ub.com.

In addition, there are 77 U.S. and foreign based bank accounts that were used to process or receive internet gambling money that the U.S. wants the online sites to forfeit.

The Meat of the Accusations

The gist of the allegations base on activities committed by online poker sites after the passage of the UIGEA. The following were some of the acts committed by payment processors to obtain funds illegally:

* Fraudulent credit card processing – the government claims that certain defendants worked with and directed others to apply incorrect transaction codes to disguise the nature of the transactions to hide they were gambling sites. They also used phony companies to initiate the charges. Petfoodstore.biz is one such company.

In addition, “store value cards” like pre-paid debit cards were setup and used for these transaction. To attempt to avoid detection, more fake sites were setup for the cards use.
* Fraudulent E-check processing – the government claims that online sites and processors setup bank accounts and lied about their purpose. In addition, sites were using poker processors to process payments by using fake companies. E-check providers mentioned were Intabill, the “Arizona Processor”, and E-Triton were all mentioned in this section.
* Transparent Processing – Sites used certain banks to help make gambling transactions transparent in another attempt to circumvent the UIGEA. John Campos and SunFirst Bank processed over $200 Million in payments for PokerStars and Full Tilt. SunFirst received over $1.6 Million in fees for this processing as well as investments from sites totaling Millions more.

Fallout from Announcement

It did not take long for PokerStars to respond to the indictment. Within an hour, US players were banned from being able to play at real money tables. Full Tilt followed later in the evening when they stated that real money play on that site would be suspended as well.

Chad Elie was arrested Friday Morning and appeared in a Las Vegas federal court Friday afternoon. He was then released on his own recognizance. U.S Magistrate Judge Peggy Leen also restricted his travel to Nevada, New York, and Washington D.C. Also, Elie must maintain lawful employment until his trial. He will appear in a New York courtroom on Monday where he intends to contest the charges.

Both John Campos and Bradley Franzen have also been arrested. Franzen is scheduled to appear in New York for his arraignment on Monday and no word has been released as to Campos’ arraignment. Other defendants are not in the US at present, but Raymond Bitar as part of the statement released by Full Tilt earlier stated that “I am surprised and disappointed by the government’s decision to bring these charges.” He also said that “I look forward to my exoneration.”

In addition, the partnerships between the Wynn and PokerStars and Station Casinos and Full Tilt Poker appear to be null and void. The Wynn released a statement that they were backing out of their deal due to the indictments. Station Casinos hasn’t release a statement, but odds are that deal is over with as well.

At present it appears that AP and UB players can still play at the sites, but for how long is yet to be determined. Other US friendly sites such as Doyles Room, Lock Poker, and Cake Poker are all operating as normally.

What does this mean for online poker? It depends. For now, it means that the two largest online poker rooms are off limits to US players. This has put a noticeable dent in traffic on sites. As of this afternoon, PokerStars was down 31% from its numbers last Friday. Full Tilt was down 20% and Cereus, the home of AP/UB, was down 19%.

Should the U.S. government become successful in getting all of their demands, this could begin the death knell for online poker in the United States. However, expect the online sites to fight this and to ultimately make some sort of deal with the government. You can also expect this to set back online poker legalization by years, if not longer. We will obviously have more details on this as they develop.

by James Guill

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Joe Sebok Steps up and gets burned

If anyone knows anything about online poker, they are aware of the Ultimate Bet and Absolute Poker scandals. Unfortunately, due to his choices in recent days, people in the poker community also know Joe Sebok. Sebok is an Ultimate Bet Poker Pro. In recent days, FatalError a former friend called him out for blackmailing him to get him to stop talking about Ulitmate Bet. In an effort to clear the air, Sebok signed up for and posted to the 2+2 forum.
In his apology it became clear that the aforementioned former friend and Joe were close enough to know personal details about each other. This information, and the fact that Joe Sebok took the time, and responsibility for his exceptionally poor choice in words, leads to the understanding that his intentions were not to blackmail. His original choice of wording, taken out of context and full understanding of the situation, easily leads a person to the thought the man is or intended to blackmail his previous buddy. As such, the 2+2 thread was relentless in conversation with him.
Through the course of more than 250 posts, Joe Sebok fielded what questions he was able to. Unfortunately those were few and even further between. His best answer was that Paul could answer the plethora of questions. Most of the posters agreed and jumped all over the idea. Many stating that it is Paul’s silence in the forum, and others like it, that lead to a continued distrust of Ultimate Bet and their representatives. Ike – a 2+2 moderator – assured Joe that if he could identify what manner Paul would respond to questions from active and selective participants on the forum, he would facilitate it. Now, after all that has been done at Ultimate Bet, will the voice of knowledge take the offer and face the music with an open mind and offer free information? Many speculate that even with solid ground and protection from the masses, Paul Leggett, will continue to hide from the hard questions

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Former World Series of Poker Champion and Ultimate Bet Consultant Banned From MGM Casinos

MGM has gained a lot of respect throughout the poker community by banning Russ Hamilton, former World Series of Poker Main Event champion and consultant for the infamous Ultimate Bet poker room. Last week, Russ came into the MGM Grand Casino in Las Vegas to play a few hands. Needless to say, a few players who were at his table recognized Hamilton and let the world know that he was in fact a cheater who scammed several members of Ultimate Bet Poker between May 2004 and January 2008. These dealings led to a refund of over $22 million with Hamilton being responsible for $6.1 million.

MGM Grand decided that it would be in the best interest of their customers to ban Russ from their establishments. This isn’t the first supposed ban that he has faced. Rumors have stated that Harrah’s has put him on their list of guests who are not welcome at their establishments. The decision has been well received by the poker community.

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Disclaimer: The following does not reflect the opinions of PokerBloggs.com.

Haley Hintze, former Editor-in-Chief of PokerNews.com, has been running a series of blogs related to the UltimateBet (now UB.com) cheating scandal. Saturday, she decided to shift her focus away from the UltimateBet scandal and provided her user with what she called evidence that Scott Tom, former head of Absolute Poker, was indeed the person responsible for the cheating scandal involving PotRipper.

She starts off the blog rehashing the whole Absolute Cheating scandal and stating that she has been among the many entities that Scott Tom has threatened with libel suits due to speaking out against him and AP. She has obtained what she considers evidence that proves that Scott Tom may indeed be the force behind the AP scandal and the other involved players may have been pawns in his game.

She starts by providing information from the anti-fraud software “ieSnare” that AP purchased from UltimateBet. She shows the information for account PotChopper that clearly points to Scott Tom as the owner.

Next, she explains how that the software assigns an ID to each new computer that logged onto AP. Tom’s primary computer was assigned “11451887.” Using this ID, the software can show where the account was logged on at. It showed that two unique machines logged onto the site from various location, but always the same two computers.

Next, she stated that his pc’s ID was linked to several of the known cheating accounts, including PotRipper, the account that brought the cheating scandal to the forefront. If you look at the image following, you will see that the device and NUID sets match those for logins from PotChopper.

Next, she produced an image of what she said was the “Graycat” account that was also involved in the cheating scandal. As you can see from the image, the ID and NUID again matches other accounts. She also provided the same information for the “Doubledrag” account.

Hintze then goes on to claim that Scott Tom was indeed behind the computer and using these accounts and not being “hacked” as he had claimed. She then produced evidence of several large deposits and a substantial withdrawal from Scott Tom’s account. Notice that he received a transfer for $70,000 from Double Drag and the account was immediately black listed. However, the account was then cleared within less than two hours and according to Hintze, this was based on directives from upper management which she stated was Scott Tom and others.

After winning a huge tourney on September 13th, 2007, Hintze indicated that Tom chip dumped a large portion of his “winnings” to other cheater accounts. After making the $70,000 withdrawal, she claims he then blacklisted the account. She states that the same was done to other accounts so that the majority of money was taken off the site.

Hintze then points out that the cheating accounts were flagged so that customer service would not close the account. She provided an image that shows the PotRipper account with the comment “Please do not close this account for any reason. Issues please consult with Brent, Adrian or Nolan.” Most of the pertinent information has been removed but she believes that the information was a “college buddy” he was using to launder money.

The allegations made by Hintze have not been proven by any other source as of the time of the writing of this article. Hintze did not reveal her sources. Should this prove to be true, it would raise a new set of questions and confirm the beliefs of many conspiracy theorists that, like Hintze, believed that Scott Tom was the head of the AP cheating scandal all along. Hintze says that she has more to publish on this matter at a future date so this isn’t the last that we will hear on this story.

- James Guill

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