Federal investigators obtained a trove of digital evidence, including emails, wire transfers and even a jump drive, to make the case that poker websites allegedly conned U.S. banks into processing $3 billion worth of illegal gambling proceeds.
Justice Department attorneys on Friday unsealed charges of bank fraud, money laundering and illegal gambling against the founders of PokerStars, Full Tilt Poker and Absolute Poker, the largest online poker operators doing business in the United States, along with their middlemen. Officials also announced restraining orders against more than 75 bank accounts used by the companies and their intermediary payment processors.
Online financial transactions played a pivotal role in enabling the co-conspirators to orchestrate the alleged illegal gambling. But the transactions also provided investigators with evidence of those activities and are enabling customers to get refunds.
After seizing the companies’ domain names, U.S. officials on Wednesday announced an agreement that allows PokerStars and Full Tilt Poker limited access to their websites to help players withdraw their stored cash. U.S. gamblers still are barred from depositing funds with the sites, but the deal allows foreign customers to play for money.
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The B.C. Lottery Corp. planned to relaunch its online gambling website, PlayNow. com, Thursday evening, more than a month after security breaches forced it to be shut down.
Approval to put the site back online at 7 p.m. was given by the province’s gambling policy and enforcement branch and the B.C. information and privacy commissioner following a review by consulting firm Deloitte, BCLC president and CEO Michael Graydon said.
A security breach that affected the personal information of 134 players forced the gambling site to shut down hours after its launch on July 15.
Twelve players had their personal information exposed to other users.
Shutting down the website cost the B.C. Lottery Corp. $150,000 a day in revenue, Graydon said. The problems required more than five weeks of troubleshooting, for a total revenue loss of more than $5 million.
Graydon would not divulge the cost of the outside investigation.
The external review found the root cause of the problem to be a glitch in a newly released part of the software, he said.
“We were one of the first ones out of the gate with it.”
Three months were spent testing the system before it went live, but the problem wasn’t found because of unique circumstances that caused user information to be exposed, he said.
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It only took a couple of hours before questions started arising about an online casino site in British Columbia. The B.C. Lottery Corp. launched PlayNow.com, and security was an issue. The website was shut down shortly after it was launched.
Now, a private investigation is taking place and the website will not be allowed to re-launch until the investigation is complete. Information and Privacy Commissioner Elizabeth Denham is in charge of reviewing the potential breach in protection.
Customers started complaining that their private information was being shared with other players at the online casino. That is one of the biggest concerns among online gamblers, and one that is supposed to become better with regulated Internet gambling.
“Customers are expecting that a government regulated website would come with maximum security for their information,” said Gaming Analyst Noah Black. “That apparently was not the case with PlayNow.com.”
The Gaming Policy and Enforcement Branch is working with Denham to determine why the security breach occurred. Once a determination is made, the B.C. Lottery will move forward with deciding when to re-launch the site.
Thousands of online gamblers were excited to join PlayNow, and originally it was reported that the traffic to the site was the reason for the crash. Later, it was revealed that the security issue was the reason the site was shut down.
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VICTORIA — The British Columbia government’s online gambling site was shutdown because of a privacy breach, B.C. Lottery Corp. officials confirmed in a news release Tuesday.
Company officials said that when PlayNow.com was relaunched last Thursday as the first government-sanctioned online casino in North America, 134 accounts were left exposed and open to any other player to access.
Twelve of the accounts had “a measure of sensitive personal information viewed by another player,” officials added, giving no further details.
All players who were affected by the breach have been contacted, officials said.
The announcement comes after extensive criticism from the New Democratic Party.
Shane Simpson, NDP critic for housing and social development, said the government should have been open from the start about the privacy breach.
“They’re expecting people to put significant personal information and credit card information on there,” said Simpson. “The government simply has to be more transparent if they want people to have confidence in their site.”
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A Canadian man has pleaded guilty to charges of assisting overseas online gambling sites to process hundreds of millions of dollars in wagers.
The conviction of Douglas Rennick, 35, comes as some U.S. lawmakers are looking to tax online gambling revenue rather than criminalizing such wagering. Federal law prohibits financial institutions and individuals from knowingly assisting in collecting and paying bets stemming from online chance gaming like poker, blackjack, slot machines and other games.
Clearly, Americans love to gamble online. The United States charged Rennick with processing or “laundering” more than $565 million in gambling payments in the United states through phony companies between 2007 and 2009.
“I had a business that transferred money from offshore gaming sites to American players within the Southern District of New York,” Rennick told U.S. District Judge Sidney Stein when he pleaded guilty Tuesday.
Rennick faces a year in prison and agreed as part of his plea Tuesday to forfeit more than $500 million. (.pdf)
According to court documents, he was accused of using financial institutions like Washington Mutual, Union Bank and others to process the payments by falsely representing (.pdf) to those institutions “that the accounts would be used for such purposes as issuing rebate checks, refund checks, sponsorship checks, affiliate checks and minor payroll processing” for retailers and auto dealerships.
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A Canadian man charged with conspiracy and bank fraud for allegedly laundering $350 million for foreign Internet gambling companies pleaded guilty to a single count of processing offshore bets of U.S. citizens.
Douglas Rennick, 35, who was indicted in August, entered his guilty plea today in federal court in New York. Michael Pancer, a lawyer for Rennick, said in court that his client agreed to forfeit $17.1 million and could face a prison term of six to 12 months when sentenced on Sept. 15.
When asked by U.S. District Judge Sidney Stein to describe his crime, Rennick said, “I had a business that transferred money from offshore gaming sites to American players within the Southern District of New York.”
He was charged with transferring the money from a Cyprus bank to U.S. accounts to pay Americans who wanted to cash out their gambling winnings from 2007 through June of last year, said prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan.
Rennick and his co-conspirators were accused of providing false and misleading information to U.S. banks about the nature of payments being processed by companies under Rennick’s control, prosecutors said in the indictment.
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A pair of UK hackers who used false betting slips in a bid to con casinos into paying out on bogus gambles were undone by greed and a schoolboy maths error, a court heard.
Andrew Ashley, 30, and Nimesh Bhagat, 31, were each handed a suspended jail sentence of one year after they pleaded guilty to theft over a plot involving the mock-up of false winning betting slips for live roulette wheels running at four Gala Casinos in London.
The duo took the casino for an estimated £33,000 in the summer of 2007 after hacking into casino systems to print out winning slips valued at up to £600, irrespective of the number that actually dropped on the wheel, The Daily Telegraph reports.
However, the scheme came unstuck after an alert cashier noticed a winning slip for £600 for a £10 bet at odds of 35-1. The casino launched an investigation that unearthed a string of other suspicious bets, traced back to Ashley and Bhagat, IT contractors working at the casino at the time of the scam.
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