The U. S. Department of Justice filed documents yesterday in response to arguments from two of the accused bankers in the “Black Friday” indictments, giving some insights into how the federal government will be prosecuting the case.
The response, a 51 page document filed on Friday in response to the pre-trial motions to dismiss charges against former Utah banker John Campos and payment processor Chad Elie, was reported by Forbes magazine writer Nathan Vardi Friday evening. In that article, Vardi details out the federal government’s objections to dismissal of the charges on several grounds and also introduces other allegations about the “Black Friday” case.
According to Vardi, federal prosecutors claim that the conduct of Campos and Elie “amounts to clear violations of the statutes charged.” Campos and Elie, along with the owners of PokerStars, Full Tilt Poker and the CEREUS Network sites Absolute Poker and UB.com, were charged with money laundering, bank fraud and violations of the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2006. The prosecutors allege that the argument by the defendants in the “Black Friday” case – that poker is a game of skill and not gambling – is wrong.
Perhaps a more serious allegation is brought up in the federal government’s response in that there was involvement by organized crime in the case. Vardi writes that the response claims that a “La Cosa Nostra” (the federal term for the Mafia) associate was called in to collect money from Elie that he was accused of stealing from the online poker companies. This, Vardi states, is an attack on the argument that the online poker industry had no connections with organized crime.
Federal prosecutors also dispel assertions from Elie that there was no conspiracy to commit bank fraud and Campos and Elie’s claims that the laws currently on the books do not apply to poker. Vardi reports that the court papers filed on Friday stated that the poker companies “engaged Elie and Campos, among others, to perform an indispensable service: find ways, by hook or crook, to move money from United States residents, through the United States financial system, to the offshore accounts of the poker companies. They did so in violation of the IGBA (the Illegal Gambling Business Act), the UIGEA and other federal statutes.”
To this point, Campos and Elie are the only defendants who have made any response to the “Black Friday” allegations of the U. S. Department of Justice. Two other alleged payment processors – Bradley Franzen and Ira Rubin – have been arrested, but have not made any legal statements regarding the case. None of the alleged ownership of the online companies – PokerStars’ Isai Scheinberg and Paul Tate, the CEREUS Network’s Scott Tom and Brent Beckley and Full Tilt Poker’s Ray Bitar, Nelson Burtnick, Howard Lederer, Chris Ferguson and Rafe Furst – has issued any statements or response to the current litigation.
The six months plus that has followed the “Black Friday” indictments has virtually eliminated online poker in the United States, save for a few operations who continue to offer poker for American action. The CEREUS Network recently announced that the company would be liquidated to allow the company to pay back players. Full Tilt Poker, after being totally shut down in June, is still in the process of an ownership change, with the French investment firm Groupe Bernard Tapie tentatively looking to buy the company and restart it for the international poker world. The only site that has stayed viable is PokerStars, who remained the number one online site in the industry after quickly paying back American players following the “Black Friday” indictments and continues to serve customers worldwide.
The motions by Campos and Elie – and the response by the federal government – are just the first steps in what will be a long process. There was no action from the court to the federal government’s response to the Campos/Elie motion and no date was given for a decision on those motions.
