VOLUME 08 ISSUE 10
PAYMENTS E-gaming fund seizures to continue in the US Authorities in the US have recently USAO for the District of Maryland Gambling Business Act); and had filed charges against two men ● Maryland Criminal Code §12- initiated a vast anti-gambling who had been ‘described in two 102 (Betting, wagering, gambling, financial campaign by seizing funds forfeiture proceedings earlier this and related activities). from the accounts of payment year, which resulted in the seizure Forfeiture was ordered in United processors linked to internet of a total of $24 million from States v. $14,200,195.73 on 17 July gaming sites. Processing internet numerous bank accounts, as 2008 and in United States v. processors of illegal gambling $9,869,283.05 on 5 February 2009. gambling transactions is unlawful in transactions in the United States The Baltimore City Paper , on 11 the US under a variety of on behalf of Bodog’ 2 . and 24 September 2009, reported regulations, most notably the Illegal The USAO for the District of that investigators had filed Gambling Business Act and the Maryland initiated the two applications for seizure warrants to forfeiture proceedings on 12 March seize funds in accounts held by Wire Act. Linda Shorey, Dennis 2008 and 28 July 2008 by filing Electracash, Inc., HDM, Inc., and Ehling, Anthony Holtzman and forfeiture complaints with the US Forshay Enterprises, Inc 3 .While the Ashley Camron, of K&L Gates, District Court for the District of 11 September news article examine the recent seizure cases in Maryland - United States v. suggested these seizures are the US. $9,869,283.05, Dkt. No. 1:08-cv- connected to the Bodog 01954 (funds seized from accounts investigation and internet The US Attorney’s Office (‘the held by ZipPayments), and United gambling, the 24 September article USAO’) for the Southern District States v. $14,200,195.73 (funds acknowledged that such a of New York (‘the SDNY’) is often seized from accounts held by JBL connection is not clear from the in the news in connection with the Services), Dkt. No. 1:08-cv-00661. documents that are available from seizure and forfeiture of funds The USAO supported its forfeiture the federal district court. related to internet gambling. A complaints with affidavits made by According to the court 2008 press release from that office a special agent with the US Internal documents associated with the touted that its Asset Forfeiture Unit Revenue Service assigned to the seizures reported by the Baltimore had set a record in 2007, when it Baltimore Field Office. City News , the USAO applied for ‘forfeited or reached agreements to The affidavits reveal that the seizure warrants on three dates. forfeit more than $1.1 billion’ 1 . special agent, since 2006, had been The first group of three According to the press release, $236 ‘investigating the operations of an applications was filed on 20 July million out of the $1.1 billion were internet gambling website called 2009 and docketed on 3 August funds forfeited by Neteller PLC Bodog.com’ , which the agent stated 2009. These applications requested and its co-founders. Most recently, ‘operates extensively in the United seizure warrants for funds in as described in the article ‘IGBA: States, taking bets from US accounts held by Electracash, Inc. Legal Basis for New Online gamblers over the phone and via in banks located in California, Gambling Activities’ , which the internet’ . The affidavits, in South Dakota, and New Jersey. The appeared in the August 2009 issue addition to ZipPayments and JBL affidavits in support of these of this Newsletter, the USAO for Services, name MPS Processing applications were made by a special the SDNY reportedly seized Ltd., Direct Channel LLC, EGALO, agent for the US Immigration and approximately $30 million in funds and Transaction Services as Customs Enforcement. Motions to from accounts in the names of payment processors that Bodog seal the affidavits were granted and payment processors who allegedly was using in the US to transfer and they were ordered sealed ‘until provided services to entities distribute funds to individuals, further order of this court, or until conducting internet poker. believed to be gamblers, 20 January 2010, whichever is The USAO for the SDNY is not throughout the country. The earlier’ . The applications describe the only USAO active in this area. accounts held by these payment the funds sought to be seized as the The USAO for the District of processors were identified as being ‘proceeds of an illegal gambling Maryland has likewise made in banks located in multiple states. business’ . headlines in connection with Among the laws the affidavits The second group of three forfeitures and seizures related to identify as applicable to the facts applications was filed on 4 internet gambling. set forth in the affidavits are: September 2009 and docketed on The Baltimore City Paper , on 30 ● 18 U.S.C. §1084 (Wire Act); 10 September 2009. These October 2008, reported that the ● 18 U.S.C. §1955 (Illegal applications requested seizure 12 world online gambling october 2009
PAYMENTS warrants for funds in accounts There may be be known to all those who are any number held by HMD, Inc. in banks suspected of violating anti- of efforts to located in California. The affidavits gambling laws. The activity by the seize alleged in support of these applications USAO for the District of Maryland illegal were made by a Maryland State also shows that at least one USAO gambling Trooper who is also an officer with proceeds other than the USAO for the underway the US Immigration and Customs SDNY is, and has been for at least that have not Enforcement Task Force. A motion three years, actively investigating been made to seal the affidavits was filed at the activity associated with illegal public same time as the applications. The gambling. Whether coordinated or applications describe the funds not, the activities of the USAO for sought to be seized as the ‘proceeds the SDNY and for the District of of an illegal gambling business’ . Maryland show the US The final application was filed on Department of Justice are taking 8 September 2009 and docketed on an aggressive approach toward 23 September 2009. This what they believe to be illegal application requested a seizure gambling operations, by attacking warrant for funds in accounts held pathways for funds to flow into by Forshay Enterprises in a bank in and out of these operations. California. The affidavit in support Linda J. Shorey Partner of this application was made by an Dennis M.P. Ehling Partner Anne Arundel County (Maryland) Anthony R. Holtzman Associate Police Detective who is also an Ashley J. Camron Associate Officer with the US Immigration K&L Gates linda.shorey@klgates.com and Customs Enforcement Task dennis.ehling@klgates.com Force. A motion to seal the anthony.holtzman@klgates.com affidavit was filed at the same time ashley.camron@klgates.com as the application. The applications 1. ‘US Attorney's Asset Forfeiture Unit describe the funds sought to be Sets $1.1 Billion Record’, available by seized as the ‘proceeds of an illegal clicking on 'Asset Forfeiture Record' at gambling business’ . www.usdoj.gov/usao/nys/pressreleases/ 2008index.html. None of the recent applications 2. Van Smith, Bodog Internet Gambling for seizure warrants disclosed the Investigation Leads to Money-Laundering amounts held in the accounts for Charges (30 October 2008), Baltimore City Paper , available at which the warrants were sought. www.citypaper.com/news/story.asp?id=1 There may be any number of 6952. efforts to seize alleged illegal 3. See Van Smith, Feds in Maryland gambling proceeds underway that Seize Bank Accounts Tied to On-Line Gambling (11 September 2009) and have not been made public. Feds in Maryland Seize Six More Bank Publicity may result when a Accounts Tied to Laundering Gambling forfeiture action is filed and a Proceeds (24 September 2009), claim is made for the property at Baltimore City Paper (available at www.citypaper.com/news/story.asp?id=1 issue, as happened in United States 8640 and v. $9,869,283.05. It may also result www.citypaper.com/printStory.asp?id=19 when the USAO puts out a news 013). release, as it did in connection with Neteller PLC and its co-founders. The fact that the recent applications by the USAO in Maryland for seizure warrants were accompanied by motions to seal the supporting affidavits indicates an ongoing investigation concerning gambling that may not 13 world online gambling october 2009
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