Feds Quietly Freeze Online Poker Cash in Washington
Jan. 5 2011 - 8:43 am | 4,046 views | 0 recommendations | 10 comments
By NATHAN VARDI
Image via Wikipedia
Federal prosecutors in the state of Washington have in recent months quietly moved to seize nearly $8 million from financial outfits that were processing transactions for big online poker companies like PokerStars, Full Tilt Poker, Ultimate Bet and Absolute Poker.
According to four civil forfeiture complaints filed in federal court in Seattle since October, federal prosecutors have moved against cash sitting in accounts at Bank of America, JPMorgan Chase & Co., Wells Fargo & Co. and SunTrust Banks, belonging to payment processor firms like Arrow Checks, Secure Money, Etegrity Processing, Anaya Trading Solutions and Blue Lake Capital Management and Logistics.
The cash grab is the latest move in the Justice Department’s battle against online poker and comes after Washington’s State Supreme Court in September upheld a 2006 state law that made it a felony to play online poker for money in the state of Washington.
The government’s cash grab is the result of a task force investigation that included the Washington State Gambling Commission and began in January 2009, the court filings show. The largest of these forfeiture cases, filed in December and involving $5.1 million, began in June after task force officer William Marik was notified by a witness that he had received a payout check of online poker winnings from Arrow Checks. The government investigation tracked more than $20 million of wire transfers from Canada and Texas to Arrow Checks accounts at Bank of America controlled by Scott Seguin and Justin Sather, court documents say.
The investigating agents contacted Washington state online poker players in July who received checks from Arrow Checks and said the money represented proceeds from online poker playing at PokerStars, court documents say. Federal prosecutors claim Seguin and Sather were operating an unlicensed money transmitting business and violated the federal wire act “because online gambling is illegal in Washington state.”
Other payment processors targeted by the feds had six bank accounts at SunTrust and Wells Fargo controlled by Sanjay Panya. Those bank accounts were used to issue checks that represented proceeds from online poker play at Full Tilt Poker and Absolute Poker, according to online poker players in the state of Washington who received them and spoke to government investigators, the court documents say. The feds moved to seize $1.3 million in the accounts connected to Panya in November, claiming he was operating an unlicensed money transmitting business and violating the wire act.
The other payment processor companies involved in the civil forfeiture actions were run by Brian Kenny and Javier Carillo, both of whom court documents say facilitated payments to Washington state residents derived from online poker play at UltimateBet.
Federal prosecutorial efforts against online poker have in recent years focused on the role of payment processors, making it seem to some that the government does not have a high degree of confidence in its position that facilitating for-money online poker violates U.S. law, specifically the wire act. PokerStars, based in the Isle of Man, has long maintained that it offers for-money online poker play to U.S. players in accordance with legal opinions from several U.S. law firms that state it is not violating U.S. law.
In August, federal prosecutors in Manhattan reached a civil settlement with Ahmad Khawaja and his two payment processing firms, which agreed to forfeit $13.3 million that the government claimed constituted proceeds of illegal gambling.
A few months earlier, in May, Douglas Rennick, a Canadian payment processor, pleaded guilty to violating the wire act by processing more than $350 million in the U.S. for Internet poker companies, forfeiting money that belonged to players of PokerStars and Full Tilt. Both companies reimbursed players for funds lost in the Rennick seizures.
The role of states and state law in the online poker landscape will likely play an important role in 2011, especially since Senator Harry Reid was unable to push through legislation late in 2010 that would have federally regulated online poker. Both PokerStars and Full Tilt Poker stopped servicing the Washington state market last year.
Jan. 5 2011 - 8:43 am | 4,046 views | 0 recommendations | 10 comments
By NATHAN VARDI
Image via WikipediaFederal prosecutors in the state of Washington have in recent months quietly moved to seize nearly $8 million from financial outfits that were processing transactions for big online poker companies like PokerStars, Full Tilt Poker, Ultimate Bet and Absolute Poker.
According to four civil forfeiture complaints filed in federal court in Seattle since October, federal prosecutors have moved against cash sitting in accounts at Bank of America, JPMorgan Chase & Co., Wells Fargo & Co. and SunTrust Banks, belonging to payment processor firms like Arrow Checks, Secure Money, Etegrity Processing, Anaya Trading Solutions and Blue Lake Capital Management and Logistics.
The cash grab is the latest move in the Justice Department’s battle against online poker and comes after Washington’s State Supreme Court in September upheld a 2006 state law that made it a felony to play online poker for money in the state of Washington.
The government’s cash grab is the result of a task force investigation that included the Washington State Gambling Commission and began in January 2009, the court filings show. The largest of these forfeiture cases, filed in December and involving $5.1 million, began in June after task force officer William Marik was notified by a witness that he had received a payout check of online poker winnings from Arrow Checks. The government investigation tracked more than $20 million of wire transfers from Canada and Texas to Arrow Checks accounts at Bank of America controlled by Scott Seguin and Justin Sather, court documents say.
The investigating agents contacted Washington state online poker players in July who received checks from Arrow Checks and said the money represented proceeds from online poker playing at PokerStars, court documents say. Federal prosecutors claim Seguin and Sather were operating an unlicensed money transmitting business and violated the federal wire act “because online gambling is illegal in Washington state.”
Other payment processors targeted by the feds had six bank accounts at SunTrust and Wells Fargo controlled by Sanjay Panya. Those bank accounts were used to issue checks that represented proceeds from online poker play at Full Tilt Poker and Absolute Poker, according to online poker players in the state of Washington who received them and spoke to government investigators, the court documents say. The feds moved to seize $1.3 million in the accounts connected to Panya in November, claiming he was operating an unlicensed money transmitting business and violating the wire act.
The other payment processor companies involved in the civil forfeiture actions were run by Brian Kenny and Javier Carillo, both of whom court documents say facilitated payments to Washington state residents derived from online poker play at UltimateBet.
Federal prosecutorial efforts against online poker have in recent years focused on the role of payment processors, making it seem to some that the government does not have a high degree of confidence in its position that facilitating for-money online poker violates U.S. law, specifically the wire act. PokerStars, based in the Isle of Man, has long maintained that it offers for-money online poker play to U.S. players in accordance with legal opinions from several U.S. law firms that state it is not violating U.S. law.
In August, federal prosecutors in Manhattan reached a civil settlement with Ahmad Khawaja and his two payment processing firms, which agreed to forfeit $13.3 million that the government claimed constituted proceeds of illegal gambling.
A few months earlier, in May, Douglas Rennick, a Canadian payment processor, pleaded guilty to violating the wire act by processing more than $350 million in the U.S. for Internet poker companies, forfeiting money that belonged to players of PokerStars and Full Tilt. Both companies reimbursed players for funds lost in the Rennick seizures.
The role of states and state law in the online poker landscape will likely play an important role in 2011, especially since Senator Harry Reid was unable to push through legislation late in 2010 that would have federally regulated online poker. Both PokerStars and Full Tilt Poker stopped servicing the Washington state market last year.
