Poker Coverage:

A Closer Look at the Department of Justice Indictment

The 11 Defendants Are Facing Decades In Prison and Seven-Figures In Fines If Convicted

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The initial shock of the Department of Justice’s indictment of the major online poker sites has more or less worn off, but the allegations remain for those 11 site representatives charged with numerous counts of bank fraud, money laundering and illegal gambling offenses.

It’s important to note, however, that these alleged crimes do not stem from PokerStars, Full Tilt Poker, UB and Absolute Poker’s ability to offer real-money online poker to U.S. citizens. Playing online poker in the United States is not a crime, but according to the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) it is illegal for these sites to have knowingly accepted payments or deposits for hosting these games.

As a result, these online poker sites allegedly utilized methods that included deceiving various banks and payment processors and later, bribing them into cooperating. According to the press release issued by Preet Bharara, U.S Attorney for the Southern District of New York, each of the 11 defendants are facing charges for a myriad of crimes including violation of the UIGEA, operation of an illegal gambling business, money laundering and conspiracy to commit bank and wire fraud.

“As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits,” said Bharara. “Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”

Janice Fedarcyk, FBI Assistant Director-in-Charge, added, “These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”

If convicted, Isai Scheinberg, Ray Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie and John Campos could be facing decades in prison and combined fines well into the seven-figures. In addition, the indictment seeks roughly $3 billion in civil money laundering penalties and revenue forfeiture from the sites themselves.

Terrence Chan, a poker professional who used to be employed by PokerStars, had this to say about one of the defendants in his blog. “Unlike many people in poker, I actually know Isai Scheinberg. He’s a good man. He’s not a scheming underworld criminal. Yes, he’s a businessman, and yes, he was a tough and demanding boss. But I also know he always ran the company with fairness and honesty. I was in the room when he made tough decisions because they were the right thing to do. Isai was definitely about doing the right thing, and he’d do it even if no one would ever know about it. On top of that, he often told me that he wanted PokerStars to run towards regulation, not away from it. He wanted to work with governments. There would be subsequent proof of these words in the creation of pokerstars.fr and pokerstars.it, sites that are regulated in their respective countries. All he — and thus PokerStars — wanted was an opportunity to do what they do best: provide a place for millions of people worldwide to play poker. And at least partially because he did it better than anyone else, today he is staring down the barrel of a federal indictment.”

Though there is no denying the seriousness of the allegations, one can’t help but wonder if their actions were commonplace in a market with a booming demand in a country lagging behind others in establishing regulations. These sites simply could have packed up shop after the passage of the UIGEA, a measure that was sneakily added at the last moment to the SAFE Port Act, and one that PokerStars and other sites believed to be legally flawed. Is it not true that these defendants were simply finding a way to keep their U.S. players happy, as well as turn a substantial profit?

Campos and Elie were arrested in Utah and Nevada on the morning of the indictment. Campos was released Monday on $25,000 bail and Elie was released Tuesday on $250,000 bail.

Franzen turned himself into the FBI on Monday, plead not guilty and was then released on $200,000 bail. The U.S. Attorney’s Office is working with foreign law enforcement agencies and Interpol to arrest the other eight defendants and will extradite those located abroad if needed.

 
 
 
 

Comments

Wurtzyboy
over 11 years ago

Julio - Just a question regarding the title of the article: It says that they could face 7 figures in fines, which would means between $1 million and $9.999 million ($1,000,000-$9,999,000) when as far as I know, they could be facing fines in the BILLIONS, which would be fines clear into the 10-figure sums ($1,000,000,000)... Just curious about that, because I know some of the sites, PokerStars and Full Tilt are both facing base fines of $1.5 billion and $1.0 billion respectively, and then some. Just saying that that's not even close to seven figures. It's actually much more.

 
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hitking1
over 11 years ago

Let's see how these "internet monsters" that crush tourney after tourney with thousands of players in them do now with the "edge" they have online, taken away. wink wink! Lets see these "beasts" crush like they do in live tourneys with far fewer player. I say FAIL and epic fail at that. Poker is easy when you have many many edges over your opponents, and by edges im mean when you can che..... well you know what i mean :)

 
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blegend
over 11 years ago

Yeah you're right, because the "internet monsters" always get better cards online than the other players, which they don't have the advantage of getting at live poker Their hands always hold up more online and they always end up getting luckier online. Also if you look into a lot of the live tournaments with only hundreds of people, the final tables rarely ever have anyone in their 20's that play a lot of online poker at them. At the final tables all you ever see are guys in their 40's and 50's that only play live. Good call hitking!

 
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Wurtzyboy
over 11 years ago

And blegend, that is undoubtedly one of the stupidest responses I have ever read regarding online poker. First of all, you're merely inferring what hitking is trying to say by inserting your own commentary of what you think he's thinking... Which I highly doubt those are the edges that hitking is referring to.

The simple answer is he's right. There are countless numbers of online players that aren't going to do well in the live fields. And I don't understand your response to him in a sense, because you basically agree with him by saying you don't see many of these young players at final tables, where if you continued your dispute of his arguments, it would have been more appropriate to say that we DO see young players in their 20s at final tables... Your response is just flawed all around...

Good call blegend!! LOL

 
 

Wurtzyboy
over 11 years ago

While it's no secret that there are a lot of successful online players that also do well in the world of live poker as well, it is true that there are going to be a lot of primarily online to only online players that will have a very tough time producing in live tournament poker and live cash game realms... And yeah, because they don't have their edges, which is to say, some software to tell them the amount of time/hands that players have been making certain plays and when they make them, to tell them the odds in certain hands, to show them who's playing too loose, and who's playing to tight... And then those who have databases of logged hands with specific players and have analyzed each hand to find out how their opponent plays... The online players who NEED these things and DEPEND on them to succeed are definitely going to be at a severe disadvantage. So there.

 
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jfdfred44
over 11 years ago

Well put Wurtlzyboy. Aside from the online informational advantage, how about the adjustment from playing 10-20 tables at once down to 1 table at a time. Its going to be difficult.

 
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RLander
over 11 years ago

Good luck to the DOJ trying to get extraditions from countries where online poker is completely legal - they're going to need it. Even seeking extradition on the bank fraud charge should be an easy case for any competent defense lawyer.

The problem for the feds is that under the laws of every country the defendants are in now, you must prove criminal intent for a criminal bank fraud charge to stick. Simply misstating what an otherwise consensual bank transfer was for would not be considered criminally fraudulent in any European court.

Without mens rea there is no crime (unless it is a strict liability offense with bank fraud is not). With no recognizable crime there can be no extradition.

 
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