By Gautham Nagesh - 04/15/11 08:55 PM EDT
The FBI shut down three of the largest poker websites Friday in what appears to be the largest crackdown on illegal online gambling to date.
Eleven executives at PokerStars, Full Tilt Poker and Absolute Poker have been charged with bank fraud, money laundering and illegal gambling offenses. Prosecutors are seeking to immediately shut down the sites and recover $3 billion from the firms.
"As charged, 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," said U.S. Attorney for Manhattan Preet Bharara in a statement.
The popularity of poker has skyrocketed in recent years thanks in
part to mainstream interest in the World Series of Poker and other
televised tournaments. Many states have legalized live poker rooms in some form, but online gambling was outlawed in 2006.
The sites operate illegally, often from servers based abroad, and rely on online payment processors to accept deposits from U.S.-based gamblers. A cottage industry of full-time poker players and backers has emerged, as has a distinct Internet subculture.
Prosecutors claim the poker companies arranged for money received from U.S. gamblers to be disguised as payments to nonexistent online merchants selling bogus goods such as jewelry and golf balls.
They also claim one-third of the money processed went directly to the firms as part of the "rake" charged to players for every hand played online.
The indictment alleges the firms hired third parties to open accounts at financial institutions to help process payments using fake companies as fronts. Four individuals have been charged with helping disguise the payments.
PokerStars and FullTilt Poker allegedly persuaded a few small local banks facing financial difficulties to process some payments in exchange for multimillion-dollar investments in the banks. One bank named by prosecutors is SunFirst Bank in Saint George, Utah.
The district court issued an order restraining 76 bank accounts in 14 countries in relation to the case. The government also seized five domain names used by companies to operate in the U.S. as part of the case.