Internet poker companies shut down, charged with fraud

A nine-count federal indictment that was unsealed Friday shut down three of the world’s largest Internet poker websites and could also end efforts by Nevada lawmakers to legalize the activity within the state.

Federal prosecutors in New York charged the founders of PokerStars, FullTilt Poker and Absolute Poker with bank fraud, money laundering and operating illegal gambling businesses.

By late Friday afternoon, two Nevada companies, Wynn Resorts Ltd. and Fertitta Interactive, said their proposed deals to operate potential online poker sites with two of the indicted companies were now dead.

A total of 11 individuals, including one Las Vegas resident, were named in the indictment.

The U.S. government also filed a civil lawsuit seeking $3 billion in money laundering penalties from the websites and their operators. The companies’ for-money online-gambling websites were shut down Friday and seized by the U.S. Department of Justice.

In a 51-page indictment, the 11 individuals were charged with violating the Unlawful Internet Gambling Enforcement Act, which was signed into law in 2006. The act made it illegal for banks and financial companies to process Internet gambling transactions.

“These defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits,” Preet Bharara, U.S. Attorney for the Southern District of New York, said in a statement. “In their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud.”

The action took the largest Internet poker companies out of business and cast doubt over whether or not the activity would ultimately be legalized in the United States anytime soon. Online poker is considered to be a large part of an estimated $26 billion a year online gambling industry.

Nevada lawmakers are currently debating Assembly Bill 258, which is backed by PokerStars and would pave the way for online gambling in the state. It directs the Nevada Gaming Commission to start drafting rules to regulate online poker but states that Internet gambling would not be implemented until sanctioned by Congress or the Justice Department.

Richard Perkins, former speaker of the Nevada Assembly who now works as a lobbyist for PokerStars, said the news shouldn’t affect efforts behind AB258.

“It is not just about this company, it is about the policy of this state,” Perkins said.

Two members of the Assembly who traveled at the behest of Perkins to England to see the online gambling company’s facilities said the indictment doesn’t change their view that Nevada should embrace Internet betting.

“I think it is a good policy for Nevada to enter into the online gaming market,” said Assemblyman William Horne, D-Las Vegas. “It provides jobs for Nevada. It provides revenue for Nevada.”

Horne, chairman of the Assembly Committee on Judiciary, took a two-day trip to England last year with Assemblyman Kelvin Atkinson, D-North Las Vegas, that was arranged by Perkins.

At the time there were no signs PokerStars would run afoul of U.S. legal authorities, Horne said.

During judiciary committee testimony on AB258 Horne said another committee member stated there were rumors online gambling companies might be facing an indictment but that Perkins assured the committee that wasn’t the case.

“Richard Perkins said that it was not true,” Horne said.

Asked whether the indictment harmed the credibility of pro-Internet gambling interests lobbying the Legislature, Horne said, “indictment doesn’t mean guilt.”

Atkinson said he still favors Nevada moving ahead into online gambling despite PokerStars problems.

“I still believe in the policy part of it,” Atkinson said. “The only interest I ever had in it was that I was told how many potential jobs it might bring to the state.”

Gov. Brian Sandoval, who on Tuesday said he supported Congress approving online poker rather than having the issue decided on a state-by-state basis, said Friday’s action showed the complexity of the issue.

“Nevada is the regulatory standard-bearer and we must continue to guard against any semblance of wrongdoing in our most important industry,” Sandoval said in a statement. “While the allegations made today against these three companies are of grave concern, I remain committed to the prospect of federal legislation that will provide for Internet gaming in a way that applies the same rigorous standards to online companies that we apply to traditional gaming institutions.”

Sandoval said he asked state gaming regulators to closely monitor the federal case.

Wynn Resorts announced a deal with PokerStars on March 24 and Fertitta Interactive, a business involving the founders of Station Casinos, announced an agreement with FullTilt on March 30.

The companies all agreed to seek the federal legalization of online poker and operate for-money gambling websites if the activity was approved in the United States.

In a statement Friday, Wynn Resorts said it “terminated its alliance with PokerStars. The decision was reached as a result of the indictment.”

A spokeswoman for Fertitta Interactive, which is co-owned by Frank Fertitta III, Lorenzo Fertitta, Tom Breitling and Tim Poster, read a statement Friday afternoon.

“The deal between FullTilt Poker and Fertitta Interactive was contingent upon the passage of federal legislation legalizing Internet poker, our own internal due diligence, and a finding of suitability for gaming licensure,” the statement said.

Gaming sources speculated any agreements between Nevada gaming licensees and online gaming companies that accepted wagers from Americans following passage of the 2006 Unlawful Internet Gaming Act are all but dead with poker company executives now under federal indictment.

Nevada Gaming Control Board Chairman Mark Lipparelli wouldn’t comment on the specifics of the indictment, but said the charges show that Internet gambling needs a strict regulatory process.

“Today’s events prove that this is an industry that is desperately in need of regulation,” Lipparelli said.

Friday’s indictment said PokerStars founder Isai Scheinberg, FullTilt founder Raymond Bitar, and Absolute Poker founders Scott Tom and Brent Beckley arranged for money to be received from U.S. gamblers that was disguised as payments to hundreds of nonexistent online merchants purporting to sell merchandise such as jewelry and golf balls.

PokerStars, which is based in the Isle of Man, a British dependency, is said to control more than 50 percent of the online poker market. In addition to Perkins, the company hired former Nevada gaming regulators Randall Sayre and Scott Scherer, public relations experts and financial experts to help gain support for the passage of AB 258.

During testimony for the bill last month in Carson City, an expert said one in every four online poker accounts belongs to U.S. citizens. It was unclear how many Nevada residents participate in online poker.

The indictment claims the poker companies tricked U.S. banks into processing billions of dollars in transactions. Approximately one-third or more of the funds went directly to the poker companies as revenue through the “rake,” which are fees charged to players on almost every hand played online.

“These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck,” FBI Assistant Director Janice Fedarcyk said in a statement. “They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”

The nine counts in the indictment carry penalties of between five and 30 years in prison and hundreds of thousands of dollars in fines.

One Nevadan, Chad Elie of Las Vegas, was named in the indictment and was arrested Friday morning. Elie, 31, was one of four individuals charged with acting as a “payment processor” who obtained accounts at U.S. banks for the poker companies.

Elie was in federal court in Las Vegas Friday afternoon, wearing a black-and-yellow sweat suit when he appeared before U.S. Magistrate Judge Peggy Leen. Elie was released on his own recognizance. Prosecutors did not object to the release.

Leen said Elie must maintain lawful employment while awaiting trial. She also restricted his travel to Nevada, New York and Washington, D.C.

The defendant is scheduled to appear in a New York courtroom Tuesday morning. Reno attorney Craig Denney represented Elie at Friday’s hearing but said Washington, D.C., attorney William Cowden will defend him in New York.

“Mr. Elie intends to go back to New York and contest the allegations,” Denney said after the hearing.

He said Elie lives in Las Vegas with his fiancee, but the lawyer declined to comment further. Cowden could not be reached for comment late Friday.

Gaming experts said the indictment sets up a worldwide legal battle between the Department of Justice and the online poker entrepreneurs who have long argued that their operations in the United States do not violate U.S. law.

In a statement, the Washington, D.C. based American Gaming Association, which came out in favor of legalizing Internet gaming last year, said the action shows a need to strengthen laws that address illegal online gambling.

“The risk of consumer fraud, money laundering and underage gambling will continue until the U.S. passes laws ensuring that only licensed, taxed and highly regulated companies can operate in the U.S. market,” the organization said in a statement.

The Poker Players Alliance, a group that supports the legalization of online poker and claims to have more than 1 million members, said the action by Department of Justice shocked the organization’s leaders.

“Online poker is not a crime and should not be treated as such,” organization chairman Alfonse D’Amato said in a statement posted on the group’s website. “We are currently gathering all of the information around today’s announcement and will offer detailed analysis when the full facts become available.”

Benham Dayanim, a Washington, D.C., attorney who represents Internet gambling firms, described how the news could affect legalization efforts in the United States.

“This is a warning that U.S. companies should be careful about with whom they do business,” Dayanim said. The indictment clearly shows, “the U.S. government view that Internet gambling is unlawful, including Internet poker.”

Contact reporter Howard Stutz at or 702-477-3871. Review-Journal reporters Carri Geer Thevenot and Benjamin Spillman contributed to this report.

Primm’s outlet mall has fallen on hard times
The mall, attached to Primm Valley Resort, opened in 1998. Back then, it was a “textbook, perfect outlet-center location." But now, Primm’s outlet mall has fallen on hard times. Las Vegas Boulevard has endless shopping spots. And there are other outlet malls that don’t require a hefty drive to the state line. Its mortgage-holder foreclosed on the mall in late September.
Las Vegas residents discuss avoiding holiday scams
Las Vegas residents discuss their donation habits and how they avoid giving money to scam charities during the holiday season. (Bailey Schulz/Las Vegas Review-Journal)
Tesla’s Nevada Gigafactory ahead of economic impact expectations
The Tesla Gigafactory’s economic impact on Nevada has exceeded projections, bringing in more than 7,000 jobs. In 2014, Nevada agreed to give the automotive and energy company $1.3 billion in tax abatements. In return, Tesla promised to meet certain requirements in areas like employment and capital investment. As of June, Tesla has brought in a total of $6.05 billion in capital investment, surpassing the $4.95 billion projection. The original contract gave the company until 2024 to make $3.5 billion in capital investments in Nevada. Derek Armstrong, deputy director of the Governor’s Office of Economic Development.
Land sales near the Las Vegas Raiders stadium
Land around the Las Vegas stadium site has been selling for high prices. A few months before the stadium’s groundbreaking, Global Trust Group acquired a 2.5-acre parcel just north of the stadium site. The property sold for $7.25 million, or $2.9 million an acre. Osprey Real Estate Capital and Huntington Hotel Group acquired a 2-acre industrial site just west of the stadium site in late November. The property sold for $6.5 million, or $3.15 million per acre. That's roughly 12 times the average price of land in the valley this year as tracked by Colliers International.
T-Mobile Tech Experience Truck parks in Toshiba Plaza at T-Mobile Arena
The Tech Experience Truck is a state-of-the-art showroom on wheels, with demonstrations that put connected drones, smart cities, augmented/virtual reality and smart tracking. The exhibit shows new wireless technology – including 5G and the Internet of Things (IoT). (K.M. Cannon/Las Vegas Review-Journal)
Steve Siegel, CEO of the Siegel Group, speaks about helping families and other needy residents
Steve Siegel, CEO of the Siegel Group, speaks about helping families and other needy residents to keep them from teetering off into homelessness. Bizuayehu Tesfaye/Las Vrgas Review-Journal @bizutesfaye
Crowds camp out for Chick-fil-A opening
Dozens of customers camped out 24 hours ahead of the 6 a.m. Thursday opening of the new Chick-fil-A on Rainbow Blvd.
Cheapest listings for sale in Las Vegas
Listed for $39,990, 585 S. Royal Crest Circle, Unit #9 is one of the cheapest homes currently listed for sale in Las Vegas. (Caroline Brehman/Las Vegas Review-Journal)
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Terry Miller discusses Convention Center
Project Manager Terry Miller explains the phases of Convention Center construction.
Zappos treats their team members on Cyber Monday
Zappos rolls out a variety of food, drinks and special activities for all team members at their downtown Las Vegas headquarters for Cyber Monday. (K.M. Cannon/Las Vegas Review-Journal)
Team Hybrid at the 2019-Model Motor Trend International Auto Show
Among the companies showing off the 2019 model cars, Team Hybrid shows off its modified cars. Las Vegas resident David David talks about the team, which is in its ninth year exhibiting at the show, and his show car.
Black Friday Shoppers at downtown Summerlin and at the Arsenal
Black Friday shoppers at downtown Summerlin and at the Arsenal. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfYe
Black Friday shopping in Las Vegas
Black Friday sale shopers express their shopping experience. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Las Vegas Livestock recycling Strip food waste
Las Vegas Livestock collects and recycles food from many Las Vegas Strip companies. (Nicole Raz/Las Vegas Review-Journal)
Black Friday at Fry's
Shoppers line up for deals early on Black Friday at Fry's Electronics on Las Vegas Boulevard South. (Mat Luschek/Las Vegas Review-Journal)
Black Friday shoppers at Best Buy at 5 am
Black Friday shoppers at Best Buy at 5 am on Nov. 23. (Mat Luschek/Las Vegas Review-Journal
Black Friday - 1am Closing Time
Quiet night.
Black Friday - 12:30am - Best Buy Arroyo Crossing
Sam's Town Holiday Lighting Ceremony
On Wednesday, Nov. 21, 2018, Mystic Falls Park opened with its annual tree lighting ceremony, hosted by Boyd Gaming Executive Chairman Bill Boyd. The attraction features a Winter Wonderland theme and holiday-inspired laser light show, available daily Nov. 23 to Jan. 1. (Mat Luschek/Las Vegas Review-Journal)
What Is A Smart City?
George Karayannis, vice president of CityNow, Panasonic’s smart-city arm, explains. (Nicole Raz/Las Vegas Review-Journal)
Walmart uses virtual reality to train employees
Walmart Academy Facilitator demonstrates the VR training program being used by Walmart stores across the country.
With holidays around the corner, department stores hiring extra staff
J.C. Penny hired 72 seasonal workers this year at the Galleria at Sunset mall in Henderson in order to handle the heavy traffic of the holiday shopping season. (Rachel Aston/Las Vegas Review-Journal)
Startup Weekend fosters new businesses
With the help of entrepreneurial peers and an expert panel of mentors, Techstars Startup Weekend fosters the ideas of attendees into marketable business plans. (Rachel Aston/Las Vegas Review-Journal)
Mecum Car Auction in Las Vegas
The Mecum Auctions is held at the Las Vegas Convention Center. Bizuayehu Tesfaye/ Las Vegas Review-Journal @bizutesfaye
Construction underway for new Google Data Center
Henderson is slated to be home to a new Google data center in December 2020. The Governor’s Office of Economic Development approved $25.2 million in tax abatements for Design LLC, a wholly-owned subsidiary of Google. The company plans to build the data center on 64 acres of land on Warm Springs Road west of Boulder Highway.
Anthony Rufo talks about his new product, an in-home digital companion and monitor.
Anthony Rufo talks about his new product, HAPPIE Home technology, an in-home digital companion and monitor designed for unpaid family caregivers that gives personalized alerts, messages and reminders. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Holiday parades help bring shoppers to Downtown Summerlin
Sports Town USA floor manager Angela Gardonio talks about the work that goes into the Downtown Summerlin holiday parades and how they benefit her and other businesses there.
Final vote on CG Technology
Final commission vote on the $2 million settlement for CG Technology.
Happie Home Startup Establishing Headquarters In Las Vegas
Digital companion startup company Happie Home is establishing its headquarters in Las Vegas after receiving tax abatements from the Governor's Office of Economic Development on Nov. 15. (Bailey Schulz/Las Vegas Review-Journal)
Officer-involved shooting in Nye County
The Nye County Sheriff's Office gives information about a shooting in Pahrump on Thursday night after a man began firing shots outside of his home. (Nye County Sheriff's Office)
Dozier execution timeline
Scott Dozier was set to be executed July 11, 2018, at the Ely State Prison. Judge Elizabeth Gonzalez delayed the execution.
Las Vegas Metropolitan Briefing 18th street gang
Las Vegas Metropolitan briefs the media on the recent arrests made regarding the 18th street gang.
Las Vegas Metropolitan Briefing - 18th street gang
Las Vegas Metropolitan briefs the media on the recent arrests made regarding the 18th street gang.
The Mob Museum
Man shot in Las Vegas traffic stop had knife, police say
Police said the man fatally shot by an officer during a traffic stop in downtown Las Vegas had a “homemade knife.” Demontry Floytra Boyd, 43, died Saturday at University Medical Center from multiple gunshot wounds after officer Paul Bruning, 48, shot him during a traffic stop. Bruning pulled Boyd over on suspicion of driving recklessly at 7:41 a.m. near Sunrise Avenue and 18th Street.
Man shot, killed by Las Vegas police after traffic stop
Las Vegas police give a briefing after a man was shot and killed by an officer following a traffic stop. (Rio Lacanlale/Las Vegas Review-Journal)
Video of suspect in Home Depot parking lot shooting
A man who was injured in a Nov. 20 shooting in the southwest Las Vegas Valley died at a hospital Tuesday, the Clark County coroner’s office said.
Nevada Task Force 1 Dog Units Return
Four dogs and their handlers returned to the Las Vegas Valley on Thursday, November 29, 2018, after deploying to the Paradise, California wildfire last week. The dogs, trained in human remains detection, are part of Nevada Task Force 1, a Federal Emergency Management Agency urban search and rescue team. (Katelyn Newberg/ Las Vegas Review-Journal)
Police thwart brazen kidnapping attempt
Metro officers suspicious of woman claiming to be with Child Protective Services prevent possible kidnapping of three-week-old infant.
Shot Spotter technology used by Metro extended for another year
Gunfire location technology being used by the Las Vegas Metropolitan Police Department gets extended for another year of evaluation.
Nye County pursuit ends in rollover crash caught by dashcam
A truck flipped twice before landing on its wheels as a driver tried to flee Nye County Sheriff's deputies on Friday, Nov. 23, 2018.
Nevada Highway Patrol stops wrong-way driver on Thanksgiving
The Nevada Highway Patrol has released dashboard and body camera video showing troopers deploying spike strips to stop a suspected impaired wrong-way driver early Thanksgiving Day. (Nevada Highway Patrol)
DUI sentencing
The parents of 8-year-old Levi Echenique speak after a woman who drove under the influence of marijuana and killed the boy was sent to prison.
3 Pahrump residents arrested on false imprisonment charges
James Thatcher, 28 of Pahrump, Chelsea Demille, 30 of Pahrump, and Sandra Wombles, 19 of Pahrump were all arrested after it was discovered that they were holding an adult female and male prisoners in their bedroom. (Nye County Sheriff's Office)
2 kids struck by gunfire in North Las Vegas shooting
On Saturday, Nov. 17, 2018, people opened fire into a residence in the 3600 block of Hamlin Place in North Las Vegas. Two kids were hit by gunfire and sent to the hospital with non-life threatening injuries, according to North Las Vegas police. Anyone with information is asked to call the NLVPD at 702-633-9111.
Man killed during road-rage incident
Las Vegas police are looking for two men involved in the shooting death of a man outside a 7-Eleven story at Bonanza Road and Maryland Parkway on Nov. 12, 2018. (Las Vegas Metropolitan Police Department)
16-year-old shot in North Las Vegas
A 16-year-old was hospitalized but was expected to survive after a shooting in North Las Vegas, near Centennial Parkway and Fifth Street, on Tuesday, November 13, 2018. North Las Vegas police spokesman Aaron Patty gives an update. (Katelyn Newberg/ Las Vegas Review-Journal)
3-year-old boy shot in North Las Vegas
North Las Vegas Police Officer Aaron Patty talks about an accidental shooting that left a 3-year-old boy “fighting for his life” on Nov. 10, 2018.
Senior Citizen Carjacking Attack -- 3 Suspects Sought
Las Vegas Metropolitan Police detectives are seeking the public's assistance in identifying the three attackers who carjacked and beat a 78-year-old man near Fremont and east Charleston on Tuesday. (LVMPD)
Henderson Police Department Chief Latesha Watson Talks Change
11-year-old girl shot, killed in North Las Vegas
An 11-year-old girl is dead after she was struck by gunfire Thursday night during a shooting in North Las Vegas
North Las Vegas police on deadly shooting
North Las Vegas police spokesman Eric Leavitt briefs the media about a shooting that left an 11-year-old girl dead on Nov. 1, 2018. (Katelyn Newberg/Las Vegas Review-Journal)
Stephan Bonnar DUI Arrest
Stephan Bonnar arrested for DUI in Nevada.
Family members of murder victims talk about their loss
Family members of murder victims talk about their loss. Susan Nash, 52, was killed in a shooting along with her daughter and one of her three sons on Sunday night. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Sayegh Cold Case Turns 40
Cary Sayegh was abducted from the playground of the Albert Einstein Hebrew Day School in Las Vegas in 1978. His body has never been found. (File Photo)
Review held in death of man after encounter with Las Vegas police
The mother of Tashii Brown, who died after an encounter with Las Vegas police on the Strip, not satisfied after public review of evidence. (K.M. Cannon/Las Vegas Review-Journal)
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like