Game over? FBI shuts down three of the largest poker sites in probe that could mean the end of online gambling – and the loss of thousands of well paid jobs – in Costa Rica.

In a surprise move today: “Three of the largest online poker sites have been shut down by the FBI in a probe that could bring about the death of the internet gambling industry.”

The entire U.S. online poker industry has approximately 2.5 million Americans players betting around $30 billion annually.

The founders of PokerStars, Full Tilt Poker, and Absolute Poker (which is based in Costa Rica) were all charged in the action. They include Isai Scheinberg and Paul Tate of PokerStars, Ray Bitar and Nelson Burtnick of Full Tilt Poker, and Scott Tom and Brent Beckley of Absolute Poker. According to a statement released by the U.S. Department of Justice, law enforcement agencies and Interpol were in pursuit of the individuals in question.

According to a statement from the Justice Department, the founders of PokerStars, Full Tilt Poker, and Absolute Poker have been charged with “bank fraud, money laundering, and illegal gambling offenses.” In addition, “restraining orders were issued against more than 75 bank accounts utilized by the Poker Companies and their payment processors, and five internet domain names used by the Poker Companies to host their illegal poker games were seized.”

You can download and read the FBI’s news release here.

Three of the defendants are Canadians. One of them, Isai Scheinberg, 64, the founder of PokerStars – with “an estimated $1.4 billion of annual global revenue and some $500 million in profit, “has dual Israeli-Canadian citizenship and lives in the Isle of Man. Late in 2010 PokerStars, claims it has legal opinions from five U.S. law firms saying it is not violating any laws.

The indictment and civil complaint seek more than US$3 billion in civil money-laundering penalties and forfeiture from the poker companies and the defendants, the DOJ said.

“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,” Preet Bharara, U.S. attorney for the Southern District of New York, said in a statement. “Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. 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.”

Australia’s Courier-Mail newspaper is laying the blame for this coup on the one man who may have single-handedly help build the online industry … then handed it to the U.S. government on a platter.

According to this story, Daniel Tzvetkoff was a young Australian entrepreneur who set up the payment processing schemes used by the biggest poker sites to handle their (mostly illegal) transactions.

Two of those companies Full Tilt Poker and PokerStars, had been seeking $100m they believed Tzvetkoff had taken from them but then Tzvetkoff was arrested in April 2010 and “charged with money laundering, bank fraud and conspiracy for processing $543m in illegal internet gambling earnings.”

“In yesterday’s indictment, federal prosecutors explain that poker companies operating offshore cannot accept most forms of payment “in connection with the participation of another person in unlawful internet gambling.” Since most banks in the US would not process their payments, the companies circumvented federal law by making payments appear to be transactions for other types of merchandise.”

Interestingly enough, it was only a few days ago on 12th April 2011 when it was announced that: “The District of Columbia is becoming the first U.S. jurisdiction to allow Internet gambling, trying to raise millions of dollars from the habits of online poker buffs and acting ahead of traditional gambling meccas like New Jersey and Nevada.”

PokerStars quickly released a statement reacting to the shutdown of their site.

“As you may have heard, we have had to suspend real money poker services to people based in the US due to legal developments there. These developments are confined to US and not have any impact on your ability to continue our services,” the statement said “Please be assured player balances are safe,” it continued. “There is no cause for concern. For all customers outside the US it is business as usual.

PokerStars website has been moved to www.pokerstars.eu, and their Support Email address is now support@pokerstars.eu. They also announced an apology to players for any inconvenience caused by this disruption.

With so many bank accounts frozen it’s probably safe to assume that a lot of employees did not get paid yesterday and people within the industry who have called me claim that if this legal action does result in the end of this industry, we could be facing the loss of 10,000+ jobs because of this shutdown so this could be a very serious setback Costa Rican economy.

Written by Scott Oliver, author of 1. Costa Rica Real Estate Scams & How To Avoid Them, 2. How To Buy Costa Rica Real Estate Without Losing Your Camisa, and 3. Costa Rica’s Guide To Making Money Offshore.

Are you into beautiful Costa Rica?

All interesting things you want to know about Costa Rica are right here in our newsletter! Enter your email and press "subscribe" button.

Leave a Reply

Your email address will not be published. Required fields are marked *