Eleven executives from PokerStars, Full Tilt Poker, Absolute Poker and some affiliated sites have been indicted on charges of bank fraud and money laundering. Visitors to any of the 3 sites are greeted with a message from The Dept. of Justice. Prosecutors have shut down the sites and are seeking to recover $3 billion from the companies. Online gambling has taken off over the last decade with an estimated 15 million Americans betting online. A players advocacy group says that thousands of people actually earn their living using these sites.
In 2006 Congress passed an anti-gambling law but a number of sites found loopholes that allowed them to work around the law. Prosecutors say that in doing so they broke the law. Rep. Barney Frank, D-Mass., and Senator Harry Reid, D-Nev., both tried to introduce bills to legalize Internet gambling last year, but both efforts failed.
According to prosecutors after the 2006 law was passed, gambling sites hide deposits from customers by disguising them as payments to non-existent online merchants. After banks started to crack down on the scam, some of the companies began to use other institutions, including small struggling banks, to process payments. Preet Bharara, the U.S. attorney in Manhattan, said in a statement that “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,”.
Two of the defendants have been arrested in Utah and Nevada while Federal agents are said to be working with Interpol to search for the others overseas.