Originally Posted by FBI
United States Attorney
Southern District of New York
FOR IMMEDIATE RELEASE
APRIL 15, 2011
CONTACT:
U.S. ATTORNEY'S OFFICE
ELLEN DAVIS, CARLY SULLIVAN,JERIKA RICHARDSON, EDELI RIVERAPUBLIC INFORMATION OFFICE
(212) 637-2600
FBI
TIM FLANNELLY, JIM MARGOLINPUBLIC INFORMATION OFFICE
(212) 384-2100
MANHATTAN U.S. ATTORNEY CHARGES PRINCIPALS
OF THREE LARGEST INTERNET POKER COMPANIES WITH BANK
FRAUD, ILLEGAL GAMBLING OFFENSES AND LAUNDERING
BILLIONS IN ILLEGAL GAMBLING PROCEEDS
Multi-Billion Dollar Civil Money Laundering And
Forfeiture Action Also Filed
Internet Domain Names Used By The Poker Companies Seized
PREET BHARARA, the United States Attorney for the
Southern District of New York, and JANICE FEDARCYK, the
Assistant-Director-in-Charge of the New York Field Office of the
Federal Bureau of Investigation ("FBI"), announced the unsealing
of an Indictment today charging eleven defendants, including the
founders of the three largest Internet poker companies doing
business in the United States - PokerStars, Full Tilt Poker, and
Absolute Poker (the "Poker Companies")- with bank fraud, money
laundering, and illegal gambling offenses. The United States
also filed a civil money laundering and in rem forfeiture
complaint (the "Civil Complaint") against the Poker Companies,
their assets, and the assets of several payment processors for
the Poker Companies. In addition, restraining orders were issued
against more than 75 bank accounts utilized by the Poker
Companies and their payment processors, and five Internet domain
names used by the Poker Companies to host their illegal poker
games were seized.
Manhattan U.S. Attorney PREET BHARARA said: "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. 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."
FBI Assistant Director-in-Charge JANICE K. FEDARCYK
said: "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."
According to the Indictment and the Civil Complaint
unsealed today:
On October 13, 2006, the United States enacted the
Unlawful Internet Gambling Enforcement Act ("UIGEA"), making it a
federal crime for gambling businesses to "knowingly accept" most
forms of payment "in connection with the participation of another
person in unlawful Internet gambling." Despite the passage of
UIGEA, the Poker Companies, located offshore, continued operating
in the United States. In a press release dated October 16, 2006,
Absolute Poker announced that the company would continue its U.S.
operations because "the U.S. Congress has no control over" the
company’s payment transactions.
Because U.S. banks and credit card issuers were largely
unwilling to process their payments, the Poker Companies
allegedly used fraudulent methods to circumvent federal law and
trick these institutions into processing payments on their
behalf. For example, defendants ISAI SCHEINBERG and PAUL TATE of
PokerStars, RAYMOND BITAR and NELSON BURTNICK of Full Tilt Poker,
and SCOTT TOM and BRENT BECKLEY of Absolute Poker, arranged for
the money received from U.S. gamblers to be disguised as payments
to hundreds of non-existent online merchants purporting to sell
merchandise such as jewelry and golf balls. Of the billions of
dollars in payment transactions that the Poker Companies tricked
U.S. banks into processing, approximately one-third or more of
the funds went directly to the Poker Companies as revenue through
the "rake" charged to players on almost every poker hand played
online.
As alleged in the Indictment, to accomplish their
fraud, the Poker Companies worked with an array of highly
compensated "payment processors" – including defendants RYAN
LANG, IRA RUBIN, BRADLEY FRANZEN, and CHAD ELIE – who obtained
-2accounts
at U. S. banks for the Poker Companies. The payment
processors lied to banks about the nature of the financial
transactions they were processing, and covered up those lies, by,
among other things, creating phony corporations and websites to
disguise payments to the Poker Companies. For example, a
PokerStars document from May 2009 acknowledged that they received
money from U.S. gamblers through company names that "strongly
imply the transaction has nothing to do with PokerStars," and
that PokerStars used whatever company names "the processor can
get approved by the bank."
By late 2009, after U.S. banks and financial
institutions detected and shut down multiple fraudulent bank
accounts used by the Poker Companies, SCHEINBERG and BITAR
developed a new processing strategy that would not involve lying
to banks. PokerStars, FullTilt Poker, and their payment
processors persuaded the principals of a few small, local banks
facing financial difficulties to engage in such processing in
return for multi-million dollar investments in the banks. For
example, in September 2009, ELIE and others approached defendant
JOHN CAMPOS, the Vice Chairman of the Board and part-owner of
SunFirst Bank, a small, private bank based in Saint George, Utah,
about processing Internet poker transactions. While expressing
"trepidations," CAMPOS allegedly agreed to process gambling
transactions in return for a $10 million investment in SunFirst
by ELIE and an associate, which would give them a more than 30%
ownership stake in the bank. CAMPOS also requested and received
a $20,000 "bonus" for his assistance. In an e-mail, one of
ELIE’s associates boasted that they had "purchased" SunFirst and
that they "were looking to purchase" "a grand total of 3 or 4
banks" to process payments.
The Indictment and Civil Complaint seek at least $3
billion in civil money laundering penalties and forfeiture from
the Poker Companies and the defendants. The District Court
issued an order restraining approximately 76 bank accounts in 14
countries containing the proceeds of the charged offenses.
Pursuant to a warrant for arrest in rem issued by the U.S.
District Court, the United States also seized five Internet
domain names used by the Poker Companies to operate their illegal
online businesses in the United States.
* * *
Defendants CAMPOS and ELIE were arrested this morning
in Saint George, Utah and Las Vegas, Nevada, respectively. ELIE
will appear later today before a U. S. Magistrate Court Judge in
Las Vegas, Nevada. CAMPOS will appear before a U.S. Magistrate
-3Court
Judge in Saint George, Utah on April 18, 2011. Defendant
FRANZEN is expected to appear for his arraignment on April 19,
2011 in the Southern District of New York. Defendants BITAR,
SCHEINBERG, BURTNICK, TATE, TOM, BECKLEY, RUBIN and LANG are not
presently in the United States and have not yet been arrested.
The U.S. Attorney’s Office for the Southern District of New York
is working with foreign law enforcement agencies and Interpol to
secure the arrest of these defendants and the seizure of criminal
proceeds located abroad. BITAR, TOM, RUBIN, BECKLEY, CAMPOS,
ELIE, and FRANZEN are U. S. citizens. A chart identifying each
defendant, the charges, and the maximum penalties, is attached to
this release.
U.S.
Attorney PREET BHARARA praised the FBI for its
outstanding leadership in the investigation, which he noted is
ongoing. Mr. BHARARA also thanked Immigration and Customs
Enforcement’s New York and New Jersey offices, and the Washington
State Gambling Commission, for their assistance in the
investigation.
The matters announced today are being handled by the
Office’s Complex Frauds and Asset Forfeiture Units. Assistant
U.S.
Attorneys ARLO DEVLIN-BROWN and NICOLE FRIEDLANDER are in
charge of the criminal case, and Assistant U. S. Attorneys SHARON
COHEN LEVIN, MICHAEL LOCKARD and JASON COWLEY are in charge of
the civil money laundering and forfeiture actions.
The charges contained in the Indictment and Civil
Complaint are merely accusations, and the defendants are presumed
innocent unless and until proven guilty.
11-098 ###
-4U.
S. v. Scheinberg et al. (10 Cr. 336)
Defendant
Citizenship
Residence
Age
ISAI SCHEINBERG
Canada;Israel
Isle of Man
64 (est.)
RAYMOND BITAR
United States
California Ireland
39
SCOTT TOM
United States
Costa Rica
31
BRENT BECKLEY
United States
Costa Rica
31
NELSON BURTNICK
Canada
Ireland
40
PAUL TATE
Isle of Man
RYAN LANG
Canada
Canada
36
BRADLEY FRANZEN
United States
Illinois Cost Rica
41
IRA RUBIN
United States
Costa Rica
52
CHAD ELIE
United States
Nevada
31
JOHN CAMPOS
United States
Utah
57
Count
Charge
Defendants
Maximum Penalties
1
Conspiracy toViolate Unlawful Internet GamblingEnforcement Act (UIGIEA)
ISAI SCHEINBERG,RAYMOND BITAR,SCOTT TOM,BRENT BECKLEY,NELSON BURTNICK,PAUL TATE,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE,JOHN CAMPOS
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease
2
Violation of Unlawful Internet GamblingEnforcement Act (UIGIEA) -PokerStars
ISAI SCHEINBERG,NELSON BURTNICK,PAUL TATE,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE,JOHN CAMPOS
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease
Count
Charge
Defendants
Maximum Penalties
3
Violation of Unlawful Internet GamblingEnforcement Act (UIGIEA) - FullTilt Poker
RAYMOND BITAR,NELSON BURTNICK,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE,JOHN CAMPOS
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease
4
Violation of Unlawful Internet GamblingEnforcement Act (UIGIEA) Absolute Poker
SCOTT TOM,BRENT BECKLEY,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease
5
Operation ofIllegal GamblingBusiness -PokerStars
ISAI SCHEINBERG,NELSON BURTNICK,PAUL TATE,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE,JOHN CAMPOS
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease; forfeitureof proceeds ofoffense
6
Operation ofIllegal GamblingBusiness - Full Tilt Poker
RAYMOND BITAR,NELSON BURTNICK,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE,JOHN CAMPOS
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease; forfeitureof proceeds ofoffense
7
Operation ofIllegal GamblingBusiness Absolute Poker
SCOTT TOM,BRENT BECKLEY,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE
5 years in prison;fine of $250,000 ortwice the grossgain or loss; 3years supervisedrelease; forfeitureof proceeds ofoffense
Count
Charge
Defendants
Maximum Penalties
8
Conspiracy toCommit Bank Fraud and Wire Fraud
ISAI SCHEINBERG,RAYMOND BITAR,BRENT BECKLEY,NELSON BURTNICK,PAUL TATE,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE
30 years in prison;fine of $1,000,000or twice the grossgain or loss; 5years supervisedrelease; forfeitureof proceeds ofoffense
9
Money LaunderingConspiracy
ISAI SCHEINBERG,RAYMOND BITAR,BRENT BECKLEY,NELSON BURTNICK,PAUL TATE,RYAN LANG,BRADLEY FRANZEN,IRA RUBIN,CHAD ELIE,JOHN CAMPOS
20 years in prison;fine of $500,000 ortwice the amount laundered; 3 yearssupervised release;forfeiture of proceeds of offense
