Acquisition of PokerStars
A Canadian company, Amaya Gaming Group Inc., announced it has entered into a $4.9 billion deal to acquire all of the shares of Oldford Group, the Isle of Man company that operates PokerStars and Full Tilt Poker.
PokerStars was founded by Canadian Isai Scheinberg.
Amaya said that it believes the transaction will expedite the entry of PokerStars and Full Tilt Poker into the regulated US online gambling environment.
PokerStars and Full Tilt Poker were already in the US online gambling market so there is no “entry” at play, rather, it’s the “re-entry” in the US gambling market which is the issue.
Black Friday criminal indictment
On April 15, 2011, the US Attorney and FBI unsealed a criminal indictment against eleven people associated with PokerStars and Full Tilt Poker on allegations that they deceived, or directed others to deceive, US banks into processing billions of dollars in online gambling payments disguising the funds as payments to fictitious merchants. Included among the indictees were Scheinberg, and two other Canadians – Nelson Burtnick and Ryan Lang. Eight of the defendants were arrested and several pled guilty to various financial crimes. The indictment arose from the fact that both companies were providing online gambling services to US persons in the US.
Specifically, the indictment alleged that certain defendants fraudulently circumvented the Bank Secrecy Act and the Unlawful Internet Gambling Enforcement Act by disguising payments from US gamblers as payments to fictitious online merchants selling other goods and services, lied to banks about the nature of their businesses and set up fictitious corporations, in order to open bank accounts to accept bets from US players.
A US bank, SunFirst Bank, was named in the indictment and the story of its take-down by the bank’s anti-money laundering specialist is legendary in financial crime circles, and was the subject of several stories in the US media last year, including USA Today. At last year’s ACAMS Financial Crime Conference, the bank’s anti-money laundering specialist informed attendees that she repeatedly told the bank that is was required by law to file suspicious activity reports for suspected financial crimes in respect of PokerStars and Full Tilt Poker and was threatened by bank officers not to do so.
World Compliance issued a white paper here that addresses the case of SunFirst Bank from an anti-money laundering perspective.
Black Friday civil complaint over money laundering
In 2011, the US also filed a civil complaint against PokerStars and Full Tilt, seeking to recover US$3 billion in civil penalties for money laundering. Asset restraining orders were issued against more than 76 bank accounts in 14 countries, including Canada, to freeze the accounts on the basis that the funds were proceeds of crime.
In 2012, the US entered into a settlement agreement with PokerStars and a separate settlement with Full Tilt Poker in the civil forfeiture action (which had alleged bank fraud, wire fraud, money laundering and illegal gambling offenses).
Under the terms of the settlement with Full Tilt Poker, it agreed to forfeit its assets to the US to resolve the action. An amended complaint filed in that action alleged that Full Tilt Poker defrauded players by misrepresenting to the public that player funds it held were safe, secure and available for withdrawal at any time.
US Attorney Preet Bharara at the time said that Full Tilt was a “global Ponzi scheme.” The US has stated that Full Tilt Poker did not maintain funds sufficient to repay all of its players and instead, utilized player funds to finance more than US$400 million in dividend payments to Full Tilt’s owners.
The US Attorney retained a claims administrator to oversee claims by what it characterized as “victims of the fraud committed by Full Tilt Poker against US players that was set forth in both the civil money laundering and forfeiture action.”
Under the terms of the settlement with PokerStars, it agreed, inter alia, to forfeit US$547 million to the US and assume Full Tilt Poker’s liability for the approximately US$184 million owed by Full Tilt to foreign players.
Status of indicted Canadians affiliated with PokerStars & Full Tilt Poker
According to the US Attorney, charges against Isai Scheinberg and two others are pending because they are at large.
In September 2012, Canadian Nelson Burtnick, who was a director of payments for PokerStars and Full Tilt Poker, pled guilty to conspiracy to commit unlawful online gambling, bank fraud, money laundering and gambling offenses in connection with a scheme to deceive banks into processing hundreds of millions of dollars of online gambling transactions.
The other Canadian, Ryan Lang, a payment processor who worked with PokerStars and Full Tilt Poker, pled guilty to money laundering, fraud and gambling offenses in connection with a scheme to deceive banks into processing hundreds of millions of dollars in online gambling transactions.