Founders Of Prominent Online Poker Sites Indicted (WYNN, LVS, MGM)

Federal authorities working in tandem with Manhattan U.S. Attorney Preet Bharara unveiled a wide-ranging indictment against the founders of PokerStars, Full Tilt Poker and Absolute Poker. The allegations include bank fraud, money laundering, and illegal gambling. In addition, authorities filed restraining orders against more than 75 bank accounts used by the companies and their payment processors. Five internet domain names were also seized. Internet poker has been in a legal gray area since a 2006 law made it a federal crime to "knowingly accept" most forms of payment from online gambling. The companies have argued that the government has no control over its payment transactions, since they were located offshore, many in Costa Rica. “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,” Manhattan U.S. Attorney Preet Bharara said in a statement. “Foreign firms that choose to operate in the United States are not free to flout the laws they don't like simply because they can't bear to be parted from their profits,” he added. Those charged included Isai Scheinberg and Paul Tate of PokerStars; Raymond Bitar and Nelson Burtnick of Full Tilt Poker; and Scott Tom and Brent Buckley from Absolute Poker. In addition, defendants linked to payment processors are Ryan Lang, Ira Rubin, Bradley Franzen and Chad Elie. Among the accusations included in the indictment are that the companies disguised online gambling deposits from U.S. players as payments to hundreds of non-existant online merchants purporting to sell miscellaneous merchandise. The payment processors that have been charged are accused of lying to U.S. banks about the disguised payments. There has been a significant push to legalize online poker in recent years, as proponents argue that it is not gambling at all, but rather a "game of skill." Steve Wynn, founder of Wynn Resorts WYNN, recently teamed up with PokerStars in a groundbreaking partnership. Now, before it even really got off the ground, that alliance is over. Wynn Resorts (WYNN) announced that it was ending the deal as a result of today's indictment. The news of this indictment may also be a small blow to other casino operators such as MGM Resorts MGM and Las Vegas Sands LVS. The rise of online poker opened up a broader and more diverse audience to the gaming world, which helped boost the allure of Las Vegas and gaming oriented vacations. Benzinga will continue to follow this story in the coming days and weeks...stay tuned.