US Prosecutors Charge Operators of Online Poker Sites with Fraud and Money Laundering

US federal prosecutors have charged 11 operators of three major online poker web sites – Full Tilt Poker, PokerStars, and Absolute Poker – with fraud and money laundering offences. The allegations are that the poker sites mislead banks into processing billions of dollars of payments from customers in the United States, even though such transactions are prohibited by the federal Unlawful Internet Gambling Enforcement Act 2006. According to the indictment, the defendants attempted to mislead financial institutions and legal authorities by funneling payments through fake companies. After the financial institutions uncovered their scheme, it is alleged that several defendants attempted to bribe some of the smaller banks into accepting payments by way of investing many millions of dollars in them. Commentators suggest that the indictment will bring clarity to federal gambling laws, specifically whether online poker is illegal. Poker sites have long argued that online poker is legal, being a game of skill, and therefore is not prohibited by the federal Wire Act. It has been suggested that prosecutors have tried to avoid this issue by relying on state laws that prohibit unlicensed gambling; however, the state laws may not apply to the foreign-based web sites because regulating international commerce is generally regarded as a valid exercise of federal power. The federal prosecutors also seized the domain names of each web site. The sites are continuing to operate in jurisdictions outside the US. For a news report from The New York Times, visit: http://tinyurl.com/3ndll8y For a copy of the indictment, see: http://tinyurl.com/3c95fc2 Summary by: Adam Lis