Federal indictments aren’t attacks against Internet gambling

May 8, 2011 9:59 AM

Federal indictments targeting top executives of three top online poker companies aren’t attacks against Internet gambling itself, a defense lawyer known for handling complex financial and corporate crimes cases told a gambling industry group.

Fred Heather of K&L Gates LLP told casino executives, government regulators and others at the iGaming North America conference in Las Vegas that the case against 11 people associated with PokerStars, Full Tilt Poker and Absolute Poker hinges on financial crimes that are separate from the act of wagering money on games online – which has become a multibillion dollar industry in the U.S.

"The heart of this case is this collateral activity, which constitutes bank fraud and money laundering," Heather said. "One of the indications of that is the fact that the government isn’t resisting the return of money to the players through their deposits."

Several executives under indictment but living in other countries will likely resist extradition to the U.S. because of severe penalties they face, Heather said.

The indictments unsealed last month charge company executives and their associates with defrauding banks into processing illegal gambling transactions. Federal prosecutors in New York say the companies and payment processors used elaborate schemes – including creating fake online businesses purporting to sell sports accessories and flowers – to mask transactions that financial institutions would normally avoid.