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The Internet Poker Civil Suit: Seeks $3 Billion Forfeiture

The Indictment of the 11 internet poker company executives and payment processors is only part of the story. Along with the Indictment, which was returned on March 10 but not unsealed until this Friday, the Government filed a civil lawsuit, available here, seeking forfeiture of $3 billion, as well as the company's domain names and websites.

The Defendant Entities are liable to the Government for a sum of money representing the amount of property, funds, or monetary instruments involved in the money laundering offenses described above, in an amount that is no less than $1.5 billion for the PokerStars Entities; $1 billion for the Full Tilt Poker Entities; and $500 million for the Absolute Poker/Ultimate Bet Entities.

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Some of the forfeiture grounds are rooted in statutes prohibiting "illegal gambling." If poker is not illegal gambling, because of the skill involved, those counts could fail. But what about the other grounds, such as forfeiture based on bank fraud, wire fraud and money laundering?

In sum, there probable cause to believe that the Defendant Properties constitute (a) property used in illegal gambling businesses, in violation of Title 18, United States Code, Section 1955, and the proceeds of illegal gambling businesses; (b) the proceeds of a conspiracy to commit wire fraud and bank fraud, in violation of Title 18, United States Code, Sections 1343, 1344, and 1349; and (c) property involved in a conspiracy to commit money laundering in violation of Title 18, United States Code, Section 1956(h). Accordingly, the Defendant Properties are subject to forfeiture to the United States of America pursuant to Title 18, United States Code, Sections 981(a) (1) (A), 981(a) (1) (C),and 1955(d).
and
From at least in or about 2006 up to and including on or about March 2011, in the Southern District of New York and elsewhere Scheinberg, Bitar, Beckley, Burtnick, Tate, Ryan Lang, Bradley Franzen,Ira Rubin, and Elie and others known and unknown unlawfully, willfully and knowingly did combine,conspire,confederate, and agree together and with each other to commit bank fraud, in violation of Title 18 United States Code, Section 1344 and wire fraud, in violation of Title 18 United States Code Section 1343. By reason of the above, the Defendant Properties are subject to forfeiture to the United States of America pursuant to 18 U.S.C. 981, 1343, 1344 and 1349.

If the poker companies and payment processors, as alleged, misrepresented the nature of their business and disguised the nature of the funds being processed when they created the bank accounts, and continued the misrepresentation when running funds through the bank accounts, does it matter as to the wire fraud and bank fraud grounds whether internet poker is gambling and therefore illegal?

The civil suit is actually a better road map to the case than the Indictment. Attached to the civil suit are the previously sealed FBI affidavits for the seizure warrants. Hopefully, they will be publicly available soon, but even without them, it's very clear how this case unfolded and that it has been in progress for quite some time.

The Unlawful Internet Gambling Enforcement Act Examination Guidance and Procedures (UIGEA rules) which became mandatory in June, 2010, are here. The ABA's page on UIGEA and compliance is here.

As for what the suit means for the future of internet poker, ESPN offers some thoughts.

I wonder, is $3 billion just a drop in the bucket to these sites -- a cost of doing business? Do they have a backup plan? Surely they knew this was coming.

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    And the names??? (none / 0) (#1)
    by jimakaPPJ on Sun Apr 17, 2011 at 05:35:00 PM EST
    Well, the IRS owned and operated the Bicycle Card Casino in LA for a while. May still do for all I know.

    civil forfeiture... for bank fraud? (none / 0) (#2)
    by beowulf on Mon Apr 18, 2011 at 06:10:39 AM EST
    I'm curious, have the words "civil forfeiture" been written in any of the recent articles of how difficult to prosecute Wall Street bank fraud?