Bloomberg News

Poker Websites Agree to Settle Money-Laundering Probe

July 31, 2012

Poker Websites Agree to Settle U.S. Money-Laundering Probe

Prosecutors alleged that the owners of the online poker companies tricked U.S. banks into processing gambling payments by using prepaid debit cards and electronic checks as well as by establishing fake online businesses, according to a complaint filed in the civil forfeiture case. Photographer: Mychele Daniau/AFP/Getty Images

PokerStars, Full Tilt Poker and Absolute Poker agreed to settle money-laundering allegations in an agreement worth at least $731 million, U.S. prosecutors said.

The three online poker companies illegally circumvented a 2006 law that bars banks from processing payments to offshore gambling websites, said prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan. At least 11 defendants have been criminally charged in connection with the allegations.

“Today’s settlements demonstrate that if you engage in conduct that violates the laws of the U.S., as we alleged in this case, then even if you are doing so from across the ocean, you will have to answer for that conduct and turn over your ill- gotten gains,” Bharara said in a statement.

The agreement with PokerStars and Full Tilt was approved today by U.S. District Judge Leonard B. Sand in New York. Full Tilt agreed to forfeit virtually all its assets, according to the statement. PokerStars agreed to forfeit $547 million to the U.S. and pay $184 million owed to foreign players by Full Tilt.

PokerStars will acquire the assets of Full Tilt, whose U.S. victims will be able to seek compensation from the Justice Department from the $547 million, prosecutors said.

Forfeit Assets

The agreement for Absolute Poker doesn’t specify an amount. Prosecutors asked the judge to approve a deal requiring the company to forfeit all its assets, including money held in accounts, hardware and intellectual property.

Prosecutors alleged that the owners of the online poker companies tricked U.S. banks into processing gambling payments by using prepaid debit cards and electronic checks as well as by establishing fake online businesses, according to a complaint filed in the civil forfeiture case.

Full Tilt further defrauded players by misrepresenting that funds on deposit with the site were secure, prosecutors alleged. Instead, the site’s owners took distributions of more than $400 million, leaving little money in accounts for players, who were owed as much as $390 million, prosecutors said.

“Full Tilt and Poker Stars had the interests of the players and the future of online poker at heart -- we knew that getting the players paid had to be a part of this transaction,” Jeff Ifrah, a lawyer for Full Tilt, said in a statement, referring to the settlement deal.

PokerStars, which didn’t admit to any wrongdoing under the settlement, will be permitted to continue doing business as long as it adheres to U.S. law, according to a statement from the company. It said it plans to reopen Full Tilt under new management.

PokerStars describes itself as the world’s most popular online poker site, with more than 49 million registered users since its start in 2001.

“We are delighted to be able to put this matter behind us, and also secure our ability to operate in the United States of America whenever the regulations allow,” PokerStars Chairman Mark Scheinberg said in a statement.

The case is U.S. v. Pokerstars, 11-cv-02564, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Christie Smythe in New York at csmythe1@bloomberg.net; Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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