On Friday, April 15, 2011, the U.S. Attorney's Office for
the Southern District of New York unsealed a grand jury indictment
against 11 individuals, including the founders of the three largest
online poker sites — PokerStars, Full Tilt Poker, and
Absolute Poker — charging them with bank fraud, money
laundering, illegal gambling offenses, and violations of the
Unlawful Internet Gambling Enforcement Act (UIGEA). In connection
with the indictment, the U.S. Department of Justice seized five
Internet domains and issued restraining orders against
approximately 76 bank accounts apparently connected to the online
poker companies in 14 countries reported to contain approximately
U.S. $7 billion. In addition to forfeiture of these funds,
prosecutors are seeking at least $3 billion in civil money
The allegations and charges focus on the financial means that
the online poker companies used to circumvent the UIGEA's
prohibition on U.S. banks and credit card companies processing
transactions transferring funds for "unlawful" online
gambling. It is alleged that the online poker companies schemed to
improperly code credit card and automated clearinghouse (ACH)
electronic check transactions of U.S. online poker players so that
they would appear to banks as being for merchant transactions
unrelated to gambling (for example, travel agencies) by using
payment-processing intermediary companies created for that purpose.
The allegations also describe efforts to "bribe" or
invest in smaller U.S. banks so that they would process
transactions from U.S. players. Two of the persons indicted were
executives of U.S. banks alleged to have been involved in such
It is expected that the online poker companies will vigorously
fight these charges. Full Tilt Poker CEO Raymond Bitar, one of the
11 persons indicted, issued a statement saying that his company
believes online poker is legal, a "position also taken by some
of the best minds in the United States," and that he would be
This indictment has the potential to create issues throughout
the U.S. banking and gaming industries. It is unclear what, if any,
fallout from this indictment there may be for U.S. banks that
processed the transactions as victims of the alleged fraudulently
misrepresented transactions with which they were presented, or the
potential for these banks to seek recourse against those
responsible. The U.S. gaming industry, which recently saw the
announcements of partnerships being formed between the leading
online poker companies targeted by this indictment in the event
that online poker was legalized in the United States, is in the
process of reacting to this news. Wynn Resorts Ltd. is reported to
have cancelled its agreement with PokerStars after the indictment
was announced, and a spokesperson for Fertitta Interactive (a
company formed by the owners of Station Casinos, Inc.) said that
the company had ended its affiliation with Full Tilt Poker.
Further, there is some indication that in the wake of this
indictment, individual states may become involved in investigating
the online poker companies as well. On April 18, 2011, it was
reported that Nevada State Senator and former U.S. Attorney Greg
Brower is calling for federal and state investigations into
political contributions made by PokerStars.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Last month, financial startup Ripple Labs, Inc. ("Ripple Labs") sued social networking app provider Kefi Labs, LLC ("Kefi Labs") and several of its employees in California federal court for over $2 million dollars in damages, including claims for alleged trademark infringement, unfair competition and cybersquatting.
On October 26, 2015, a putative class action lawsuit was filed against TD Bank USA, N.A. ("TD Bank") in the United States District Court for the District of New Jersey, alleging that the bank violated the Telephone Consumer Protection Act ("TCPA").