Poker Busts: A Trail of Cooperators
Looking at today's indictment, available here, it's obvious there was an earlier, preceding indictment. The case is numbered 10-cr-336 which means it was filed in 2010. And today's indictment is called a "Superseding Indictment."
Who got indicted first in case no 10-cr-336? Daniel Tzvetkoff, age 27, owner of Intanet, an online payment processing company in Australia. He was indicted in New York in April, 2010 on money laundering and related charges for processing $543 million in payments for online gambling companies and disguising the transactions as being unrelated to gambling. [More...]
He was arrested in Nevada, at first ordered released on bond, but the Government got a stay pending a review hearing, and on April 28, 2010, he was ordered detained without bond as a flight risk. One of his two attorneys is Boston powerhouse Marty Weinberg, one of the best defense lawyers anywhere (and, disclosure, a long time friend.)
Pre-trial motions were due to be filed in August. None were filed. Instead the docket shows only a series of sealed documents placed in the court's vault.
According to the Australia newspapers, he's been released from jail. Since there's no indication of that on the court docket, it must be in one of the sealed documents.
Translation (mine): He was cooperating.
So how did they get Tzvetkoff? It looks to me like they got him through Andrew Thornhill, who was first charged in 2009 in a sealed complaint with violations of 18 U.S.C. 371, 1349,1956(h), conspiracy to commit fraud and conspiracy to commit money laundering. He was granted a $500,000 bond that required no money, only the signatures of two responsible people. His complaint is still not unsealed. Then, in June, 2010, two months before Daniel Tzvetkoff is indicted, he agreed to plead guilty to an information, charging him with Conspiracy under 18 USC 371 to Make False Statements in connection with Loan Applications and Conspiracy to participate in an illegal gambling business(Case 10 cr 533.) (The maximum penalty for each offense is 5 years, quite a reduction from money laundering.) He was sentenced to a whopping 3 months in prison. He also had to forfeit $96,000, his 2008 Audi, and his right to any payments Intanet (Tzvetkoff's company) owed for his services. Thornhill, age 40, was released from federal custody on March 4, 2011.
Shorter version (my assumption): Thornhill cooperated in exchange for his 3 month sentence and gave up Tzvetkoff and others.
Who else did Thornhill and/or Tzvetkoff give up? On July 30, 2010, Curtis Pope, who also worked with Intanet, was indicted in Case no. 10-cr-675 for money laundering, gambling and fraud offenses, including processing online payments for gambling businesses, in the amount of $543 million, same as Tzvetkoff. He has pleaded guilty and is awaiting sentencing. His lawyers also filed no motions and some documents in the case are sealed. (It's not possible to tell what he pleaded guilty to or what sentencing concessions he's getting since the documents are sealed.)
Pope's sentencing was continued for medical reasons until March, 2011, but there's no docket entry for his actual sentencing.
Translation (mine): He cooperated as well.
Another giveaway these three are related (in addition to Thornhill's Information mentioning Intanet and the new indictment having the same case number as Tzvetkoff's case): They were all charged with conspiracy for a time period beginning in February, 2008. (The end date for Tzvetkoff is March, 2009, for Pope it is May, 2009 and for Thornhill it is December, 2009, the month he was first charged.)
There's a lot more players involved in the story. One of the men indicted today is named Chad Elie. Chad Elie filed a civil lawsuit in Utah in December, 2010 against Jeremy Johnson and SunFirst Bank and others for fraud. (Case No. 10-cv-01273.) It just recently got unsealed. SunFirst is the bank mentioned in the DOJ press release today.
The FTC got mad at Elie and intervened in his Utah civil case saying he was greedy and trying to get all SunFirst's and Johnson's money for himself, as if he was their only victim, when there were hundreds of victims in Nevada, where the FTC had a case going against Jeremy Johnson. (Nevada Case 10-cv-02203). From its motion:
As explained in detail below, the FTC seeks to intervene because plaintiff Chad Elie has engaged in a secretive race to the courthouse in an effort to grab money held by the defendants. Meanwhile, the FTC has filed a lawsuit in the District of Nevada, FTC v. Johnson, CV 10-2203- RLH (GWF) (D. Nev.) (the “Nevada case”), charging Jeremy Johnson, nine of his underlings (including defendants Leavitt and Johnston), and 61 of his corporations with orchestrating a massive Internet fraud that has caused consumers to lose over $275 million.Elie ended up dismissing his civil Utah case. But somebody must have still been pretty mad at him, because he's now one of the 11 indicted in the new gambling case. (He filed so many documents in the Utah case with exhibits, including e-mails, I wouldn't be surprised if he gave the government a road map to indicting him.)
Another person who was indicted today is John Campos, a shareholder and Vice-Chairman of SunFirst Bank. According to the DOJ press release,
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.
The financial stakes are much higher with the new Indictment. The Government is seeking to forfeit $3 billion from those indicted.
Several of the new defendants reside outside the U.S. Full-Tilt Poker, in Ireland, has released a statement of support for both its CEO Raymond Bitar and Nelson Burtnick.
Online poker is a game of skill enjoyed by tens of millions of people in the United States and across the world. And, Full Tilt Poker remains as committed as ever to preserving the rights of those players to play the game they love online.
Mr. Bitar and Full Tilt Poker believe online poker is legal – a position also taken by some of the best legal minds in the United States. Full Tilt Poker is, and has always been committed to preserving the integrity of the game and abiding by the law.
“I am surprised and disappointed by the government’s decision to bring these charges. I look forward to Mr. Burtnick’s and my exoneration,” said Mr. Bitar.
And the bad news for those in the U.S. who played through Full Tilt Poker:
Unfortunately, as a result of this action, Full Tilt Poker has decided that it must suspend “real money” play in the United States until this case is resolved. However, Full Tilt Poker will continue to provide peer-to-peer online poker services outside of the United States.
[Note: The assumptions above are based only on publicly available court files through PACER. I have never heard of any of these people, or the poker businesses involved, before today. Criminal charges contained in indictments are merely allegations. They should not be taken as a sign of guilt. Also,while those who have pleaded guilty have made admissions and allegations against others, keep in mind that those who make deals to cooperate against others in exchange for leniency for their own misdeeds have a motive to embellish and fabricate. Freedom is a commodity far more precious than money.]
Update 4/17: I forgot a big one: Douglas Rennick. Rennick, a Canadian involved in the payment processing business, was indicted in August, 2009, on charges of bank fraud, money laundering and illegal gambling(Indictment here.) The bank fraud charge alone carried a sentence of up to 30 years. Via PACER, Rennick surrendered on the Indictment on May 10, 2010 and was granted release on bond. The very next day, he pleaded guilty to a one count information charging a violation of 18 USC 1084, Transmission of Gambling Information, which carries a maximum penalty of two years. His sentence? On September 15, 2010, he was sentenced to 6 months of probation, on house arrest in California.
Translation: The plea deal was worked out over months, before Rennick ever appeared in court on the charges in the Indictment.
On May 11, 2010, the same day he pleaded guilty, he also agreed to the forfeiture of $565 million ($565,908,208) representing the proceeds of the "gambling conspiracy offense"; $16,341,941.59 million seized on June 2, 2009 in an account at Wells Fargo in the name of "Account Services"; $759,115.29 and $16,637.33 seized on June 12, 2009 in accounts at Union Bank in the name of "Account Services".
What a deal for Rennick. It sure seems like he must have cooperated to get it. Only, there's no reference to cooperation in the Government's sentencing memorandum. The Government says Rennick spared it the cost of extraditing him from Canada by agreeing to surrender. There are no sealed documents. And he did have excellent attorneys (Gerald Lefcourt in New York and Michael Pancer in CA). Maybe they just did a great job, and got the Government to dismiss the bank fraud and money laundering charges, and let him plead to a two year offense for which his guidelines are 6 to 12 months, provided he forfeits boatloads of money, all of which except the $565 million is already in the Government's possession. On the forfeiture: The Government got the money when it obtained seizure warrants in 2009 for a slew of bank accounts. They are not available on PACER, either because they are sealed or because they aren't "civil actions" but "warrants" which aren't electronically filed. A few of the seizure warrants and affidavits were unsealed and released with heavy redactions after a media group, Costigan Media, sued to intervene and obtain them.
I suspect a much fuller picture will emerge when the full affidavits for the seizure warrants are released. That should be very soon, since the civil forfeiture suit the Government filed on Friday when it filed the new criminal Indictments states that the affidavits are attached as exhibits to the complaint. While the civil complaint is available online, it's not yet on PACER. Once it's on PACER, the affidavits for the seizures, which are attached as exhibits, should also be available. (The SDNY is very slow getting documents on PACER for some reason. Other places, the documents are available the minute they are filed.)
In any event, Rennick seems to be a part of the story of the new case. Whether he provided information to help the Government remains to be seen.
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