Internet Gambling Pay Processer Charged With Bank Fruad

This is an interesting article about a guy who used bank accounts to process payments for poker and other casino games and is now being charged with bank fraud and money laundering.

Internet Gambling Payment Processor Charged with Bank Fraud, Money Lau
For Immediate Release
August 6, 2009 United States Attorney's Office
Southern District of New York
Contact: (212) 637-2600 (212) 637-2600
Internet Gambling Payment Processor Charged with Bank Fraud, Money Laundering and Illegal Gambling Offenses

NEW YORK—Lev L. Dassin, the Acting U.S. Attorney for the Southern District of New York, and Joseph M. Demarest, Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced today the filing of an indictment charging Douglas Rennick with bank fraud and other offenses stemming from his role in processing more than $350 million for Internet gambling companies. According to the indictment filed yesterday in Manhattan federal court:

Since at least 2007 through June 2009, Rennick opened a number of bank accounts in the United States under various corporate names, such as KJB Financial Corporation, Account Services Corporation and Check Payment Financial Co. In opening the accounts, he and his co-conspirators falsely represented that the accounts would be used for such purposes as issuing rebate checks, refund checks, sponsorship checks, affiliate checks and minor payroll processing. In fact, Rennick and his co-conspirators used the accounts to receive funds from offshore Internet gambling companies that offered, variously, poker, blackjack, slots and other casino games. Rennick and his co-conspirators then disbursed those funds via checks to U.S. residents seeking to cash out their gambling winnings. Rennick and his co-conspirators provided false and misleading information to U.S. banks about the purpose of the accounts because the banks would not have processed the transactions had they known they were gambling-related. In total, Rennick and his co-conspirators processed more than $350 million transferred from a Cyprus bank account to various U.S. bank accounts for this purpose.

Rennick is charged with one count each of conspiracy to commit bank fraud, conspiracy to engage in money laundering and conspiracy to operate an illegal gambling business. If found guilty, Rennick faces a maximum term of 30 years in prison and a $1 million fine on the bank fraud charge, 20 years in prison and a $500,000 fine on the money laundering charge, and five years in prison and a $250,000 fine on the gambling charge. The indictment also seeks the forfeiture of at least approximately $565,908,288, which represents the amount of proceeds obtained as a result of the illegal gambling and bank fraud conspiracies. The case has been assigned to U.S. District Judge Sidney H. Stein.

Rennick, 34, currently resides in Canada.

Mr. Dassin praised the investigative work of the FBI and thanked the Department of Homeland Security’s U.S. Immigration and Customs Enforcement and the Internal Revenue Service for their assistance in the investigation. Mr. Dassin added that the investigation is continuing.

Assistant U.S. Attorneys Arlo Devlin-Brown and Jonathan New are in charge of the prosecution, and Assistant U.S. Attorney Jeffrey Alberts is in charge of the forfeiture in this case.

The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

This is Greg Raymers response to the article of the man charged with bank fraud and money laundering.

Concern Grows Over U.S. Attorney’s Poker-Related Lawsuit
U.S. Attorney Charges Man with Three Counts of Conspiracy



Outrage. That’s how Greg Raymer, the 2004 world champion of poker, describes his sentiment after news broke late last week that a U.S. Attorney was suing Douglas Rennick, allegedly the owner of several poker payment processors, for nearly $566 million in recovered money for violating three counts of U.S. Code.
“Anytime something immoral happens, I’m outraged by it. And I consider what these prosecutors have done to be immoral,” said Raymer, a patent attorney and a member of the board of directors of the Poker Players Alliance, the industry’s largest advocacy group. “If they actually think online poker is illegal, they’re incompetent. That’s just not an appropriate interpretation of any of these federal laws.”
Lev L. Dassin, the acting U.S. Attorney for the Southern District of New York, filed an indictment against Rennick for bank fraud conspiracy, money laundering conspiracy, and gambling conspiracy.
Rennick is alleged to have provided payment services to online poker players through several companies, including My ATM Online, Alenis Limited, KJB Financial Corporation, Account Services Corporation and Check Payment Financial Co. While some of these names may be familiar to online poker players, Raymer says that it by no means implies Rennick’s guilt.
“Casino games aren’t illegal under any federal law for online gambling sites, only sports betting,” said Raymer.
The 13-page indictment indicates that Rennick, a Canadian citizen, made payments on behalf of online companies for “different types of online gambling, including poker, blackjack, slot machines, and other casino games.” The indictment doesn’t accuse Rennick of making any payments involving sports bets.
Both Dassin and the Southern District of New York declined to comment to Card Player about the indictment or the ongoing investigation.
This is the same district court that seized approximately $30 million in online poker funds in early June of this year. While the poker sites swallowed that total and reimbursed the players whose checks had unexpectedly bounced, Rennick and Account Services sued to get the money back, according to Raymer.
“If you have money seized from you and you think it was improper, you file a lawsuit to recover the money. That’s the way seizure laws work,” said Raymer, who believes Rennick is being punished for his actions against the U.S. Attorney’s office. “You’d think if they really had aspirations to put him in the jail in the beginning, they might have done that first rather than seize the money first, or they might have done them simultaneously. That’s why this doesn’t smell right.”
With the charges levied upon him from the U.S. Attorney’s office, Rennick could face up to 55 years in prison for the three charges.

While the online poker community has decried the UIGEA, an act that was first passed in 2006 that made it illegal for banks, credit card companies, and payment processors like PayPal to transfer funds from gamblers to online casinos, and vice versa, there is actually no mention of the UIGEA in the U.S. Attorney’s case against Rennick.
In fact, Rennick can only receive a total of five years in jail for the gambling charge, even if he were convicted and held to the maximum penalty. The much harsher sentences correlate with the bank fraud and money laundering charges.
For the gambling charges, the U.S. Attorney cites New York Penal Law, which describes gambling as risking “something of value upon the outcome of a contest of chance.” New York Penal Law describes “a contest of chance” as any game “in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.”
The emphasis of the indictment centers on the bank fraud charge however, stating no less than seven times within three pages that Rennick either provided false or misleading information to the banks.
“Rennick did not disclose to Washington Mutual Bank that KJB Financial Corporation would process payments from internet gambling companies,” the indictment reads at one point. “Instead, Rennick falsely and misleadingly represented…that his company would issue checks ‘for the following reasons’…”
The reasons Rennick allegedly gave included affiliate checks, rebates, refunds, sponsorship checks, and minor payroll.
Rennick could also be sentenced for up to 20 years on the money laundering charge. The indictment alleges Rennick and other unnamed defendants “did transport, transmit, transfer…funds from or through a place outside the United States to a place in the United States with intent to promote the carrying on of a specified unlawful activity, to wit, the operation of an illegal gambling business.”
Of course, the debate then centers on what constitutes an “illegal gambling business” — certainly not an online poker site, Raymer and other poker advocates would say.
“You know, the funny thing is, even if we were to assume that everything about this is illegal, how much money did this guy make without ever setting foot inside the U.S.?” said Raymer. “If what he did was illegal, in terms of what he describes to the banks, this isn’t the kind of thing that most countries would extradite you for. So if that’s what happened and he’s found guilty or if he settles of whatever, he’s made millions of dollars and just wouldn’t be able to come to the U.S.”
The U.S. Attorney’s office seeks nearly $566 million from Rennick, a total it claims is “property representing the amount of proceeds obtained as a result of the bank fraud conspiracy offense.” The indictment alleges approximately $379 million “was involved in the money laundering offense or is traceable to such property.”
If it were to happen, the forfeiture of $566 million would be among the largest in the history of the Southern District of New York, according to the U.S. Attorney’s office.
Raymer predicts that these developments will have little to no effect to the immediate lives of online poker players in the U.S.
“I think the only real impact it’s going to have is the fact that it’s scaring people,” said Raymer, who says he doesn’t expect any of the sites’ payouts to be affected, pointing to the fact that all poker players still received their funds despite the U.S. Attorney’s June seizure of funds.
Still, Raymer says that online poker players need to continue to fight to hold their ground, encouraging people to write their members of Congress and to join the PPA if they haven’t already.