The Indictment of the 11 internet poker company executives and payment processors is only part of the story. Along with the Indictment, which was returned on March 10 but not unsealed until this Friday, the Government filed a civil lawsuit, available here, seeking forfeiture of $3 billion, as well as the company's domain names and websites.

The Defendant Entities are liable to the Government for a sum of money representing the amount of property, funds, or monetary instruments involved in the money laundering offenses described above, in an amount that is no less than $1.5 billion for the PokerStars Entities; $1 billion for the Full Tilt Poker Entities; and $500 million for the Absolute Poker/Ultimate Bet Entities.

Some of the forfeiture grounds are rooted in statutes prohibiting “illegal gambling.” If poker is not illegal gambling, because of the skill involved, those counts could fail. But what about the other grounds, such as forfeiture based on bank fraud, wire fraud and money laundering?

In sum, there probable cause to believe that the Defendant Properties constitute (a) property used in illegal gambling businesses, in violation of Title 18, United States Code, Section 1955, and the proceeds of illegal gambling businesses; (b) the proceeds of a conspiracy to commit wire fraud and bank fraud, in violation of Title 18, United States Code, Sections 1343, 1344, and 1349; and (c) property involved in a conspiracy to commit money laundering in violation of Title 18, United States Code, Section 1956(h). Accordingly, the Defendant Properties are subject to forfeiture to the United States of America pursuant to Title 18, United States Code, Sections 981(a) (1) (A), 981(a) (1) (C),and 1955(d).

and

From at least in or about 2006 up to and including on or about March 2011, in the Southern District of New York and elsewhere Scheinberg, Bitar, Beckley, Burtnick, Tate, Ryan Lang, Bradley Franzen,Ira Rubin, and Elie and others known and unknown unlawfully, willfully and knowingly did combine,conspire,confederate, and agree together and with each other to commit bank fraud, in violation of Title 18 United States Code, Section 1344 and wire fraud, in violation of Title 18 United States Code Section 1343. By reason of the above, the Defendant Properties are subject to forfeiture to the United States of America pursuant to 18 U.S.C. §§ 981, 1343, 1344 and 1349.

If the poker companies and payment processors, as alleged, misrepresented the nature of their business and disguised the nature of the funds being processed when they created the bank accounts, and continued the misrepresentation when running funds through the bank accounts, does it matter as to the wire fraud and bank fraud grounds whether internet poker is gambling and therefore illegal?

The civil suit is actually a better road map to the case than the Indictment. Attached to the civil suit are the previously sealed FBI affidavits for the seizure warrants. Hopefully, they will be publicly available soon, but even without them, it's very clear how this case unfolded and that it has been in progress for quite some time.

The Unlawful Internet Gambling Enforcement Act
Examination Guidance and Procedures (UIGEA rules) which became mandatory in June, 2010, are here. The ABA's page on UIGEA and compliance is here.

As for what the suit means for the future of internet poker, ESPN offers some thoughts.

I wonder, is $3 billion just a drop in the bucket to these sites — a cost of doing business? Do they have a backup plan? Surely they knew this was coming.

Friday's announcement of a massive indictment against 11 big wigs in the world on online poker follow a predictable pattern: Earlier busts and flips.

Looking at today's indictment, available here, it's obvious there was an earlier, preceding indictment. The case is numbered 10-cr-336 which means it was filed in 2010. And today's indictment is called a “Superseding Indictment.”

Who got indicted first in case no 10-cr-336? Daniel Tzvetkoff, age 27, owner of Intanet, an online payment processing company in Australia. He was indicted in New York in April, 2010 on money laundering and related charges for processing $543 million in payments for online gambling companies and disguising the transactions as being unrelated to gambling.

He was arrested in Nevada, at first ordered released on bond, but the Government got a stay pending a review hearing, and on April 28, 2010, he was ordered detained without bond as a flight risk. One of his two attorneys is Boston powerhouse Marty Weinberg, one of the best defense lawyers anywhere (and, disclosure, a long time friend.)

Pre-trial motions were due to be filed in August. None were filed. Instead the docket shows only a series of sealed documents placed in the court's vault.

According to the Australia newspapers, he's been released from jail. Since there's no indication of that on the court docket, it must be in one of the sealed documents.

Translation (mine): He was cooperating.

So how did they get Tzvetkoff? It looks to me like they got him through Andrew Thornhill, who was first charged in 2009 in a sealed complaint with violations of 18 U.S.C. 371, 1349,1956(h), conspiracy to commit fraud and conspiracy to commit money laundering. He was granted a $500,000 bond that required no money, only the signatures of two responsible people. His complaint is still not unsealed. Then, in June, 2010, two months before Daniel Tzvetkoff is indicted, he agreed to plead guilty to an information, charging him with Conspiracy under 18 USC 371 to Make False Statements in connection with Loan Applications and Conspiracy to participate in an illegal gambling business(Case 10 cr 533.) (The maximum penalty for each offense is 5 years, quite a reduction from money laundering.) He was sentenced to a whopping 3 months in prison. He also had to forfeit $96,000, his 2008 Audi, and his right to any payments Intanet (Tzvetkoff's company) owed for his services. Thornhill, age 40, was released from federal custody on March 4, 2011.

Shorter version (my assumption): Thornhill cooperated in exchange for his 3 month sentence and gave up Tzvetkoff and others.

Who else did Thornhill and/or Tzvetkoff give up? On July 30, 2010, Curtis Pope, who also worked with Intanet, was indicted in Case no. 10-cr-675 for money laundering, gambling and fraud offenses, including processing online payments for gambling businesses, in the amount of $543 million, same as Tzvetkoff. He has pleaded guilty and is awaiting sentencing. His lawyers also filed no motions and some documents in the case are sealed. (It's not possible to tell what he pleaded guilty to or what sentencing concessions he’s getting since the documents are sealed.)

Pope’s sentencing was continued for medical reasons until March, 2011, but there's no docket entry for his actual sentencing.

Translation (mine): He cooperated as well.

Another giveaway these three are related (in addition to Thornhill's Information mentioning Intanet and the new indictment having the same case number as Tzvetkoff's case): They were all charged with conspiracy for a time period beginning in February, 2008. (The end date for Tzvetkoff is March, 2009, for Pope it is May, 2009 and for Thornhill it is December, 2009, the month he was first charged.)

There's a lot more players involved in the story. One of the men indicted today is named Chad Elie. Chad Elie filed a civil lawsuit in Utah in December, 2010 against Jeremy Johnson and SunFirst Bank and others for fraud. (Case No. 10-cv-01273.) It just recently got unsealed. SunFirst is the bank mentioned in the DOJ press release today.

The FTC got mad at Elie and intervened in his Utah civil case saying he was greedy and trying to get all SunFirst's and Johnson's money for himself, as if he was their only victim, when there were hundreds of victims in Nevada, where the FTC had a case going against Jeremy Johnson. (Nevada Case 10-cv-02203). From its motion:

As explained in detail below, the FTC seeks to intervene because plaintiff Chad Elie has engaged in a secretive race to the courthouse in an effort to grab money held by the defendants. Meanwhile, the FTC has filed a lawsuit in the District of Nevada, FTC v. Johnson, CV 10-2203-RLH (GWF) (D. Nev.) (the “Nevada case”), charging Jeremy Johnson, nine of his underlings (including defendants Leavitt and Johnston), and 61 of his corporations with orchestrating a massive Internet fraud that has caused consumers to lose over $275 million.

Elie ended up dismissing his civil Utah case. But somebody must have still been pretty mad at him, because he's now one of the 11 indicted in the new gambling case. (He filed so many documents in the Utah case with exhibits, including e-mails, I wouldn't be surprised if he gave the government a road map to indicting him.)

Another person who was indicted today is John Campos, a shareholder and Vice-Chairman of SunFirst Bank. According to the DOJ press release,

Campos allegedly agreed to process gambling transactions in return for a $10 million investment in SunFirst by ELIE and an associate, which would give them a more than 30% ownership stake in the bank. CAMPOS also requested and received a $20,000 “bonus” for his assistance.

The financial stakes are much higher with the new Indictment. The Government is seeking to forfeit $3 billion from those indicted.

Several of the new defendants reside outside the U.S. Full-Tilt Poker, in Ireland, has released a statement of support for both its CEO Raymond Bitar and Nelson Burtnick.

Online poker is a game of skill enjoyed by tens of millions of people in the United States and across the world. And, Full Tilt Poker remains as committed as ever to preserving the rights of those players to play the game they love online.

Mr. Bitar and Full Tilt Poker believe online poker is legal – a position also taken by some of the best legal minds in the United States. Full Tilt Poker is, and has always been committed to preserving the integrity of the game and abiding by the law.

“I am surprised and disappointed by the government’s decision to bring these charges. I look forward to Mr. Burtnick’s and my exoneration,” said Mr. Bitar.

And the bad news for those in the U.S. who played through Full Tilt Poker:

Unfortunately, as a result of this action, Full Tilt Poker has decided that it must suspend “real money” play in the United States until this case is resolved. However, Full Tilt Poker will continue to provide peer-to-peer online poker services outside of the United States.

[Note: The assumptions above are based only on publicly available court files through PACER. I have never heard of any of these people, or the poker businesses involved, before today. Criminal charges contained in indictments are merely allegations. They should not be taken as a sign of guilt. Also,while those who have pleaded guilty have made admissions and allegations against others, keep in mind that those who make deals to cooperate against others in exchange for leniency for their own misdeeds have a motive to embellish and fabricate. Freedom is a commodity far more precious than money.]

Update 4/17: I forgot a big one: Douglas Rennick. Rennick, a Canadian involved in the payment processing business, was indicted in August, 2009, on charges of bank fraud, money laundering and illegal gambling(Indictment here.) The bank fraud charge alone carried a sentence of up to 30 years. Via PACER, Rennick surrendered on the Indictment on May 10, 2010 and was granted release on bond. The very next day, he pleaded guilty to a one count information charging a violation of 18 USC 1084, Transmission of Gambling Information, which carries a maximum penalty of two years. His sentence? On September 15, 2010, he was sentenced to 6 months of probation, on house arrest in California.

Translation: The plea deal was worked out over months, before Rennick ever appeared in court on the charges in the Indictment.

On May 11, 2010, the same day he pleaded guilty, he also agreed to the forfeiture of $565 million ($565,908,208) representing the proceeds of the “gambling conspiracy offense”; $16,341,941.59 million seized on June 2, 2009 in an account at Wells Fargo in the name of “Account Services”; $759,115.29 and $16,637.33 seized on June 12, 2009 in accounts at Union Bank in the name of “Account Services”.

What a deal for Rennick. It sure seems like he must have cooperated to get it. Only, there’s no reference to cooperation in the Government’s sentencing memorandum. The Government says Rennick spared it the cost of extraditing him from Canada by agreeing to surrender. There are no sealed documents. And he did have excellent attorneys (Gerald Lefcourt in New York and Michael Pancer in CA). Maybe they just did a great job, and got the Government to dismiss the bank fraud and money laundering charges, and let him plead to a two year offense for which his guidelines are 6 to 12 months, provided he forfeits boatloads of money, all of which except the $565 million is already in the Government’s possession.

On the forfeiture: The Government got the money when it obtained seizure warrants in 2009 for a slew of bank accounts. They are not available on PACER, either because they are sealed or because they aren’t “civil actions” but “warrants” which aren’t electronically filed. A few of the seizure warrants and affidavits were unsealed and released with heavy redactions after a media group, Costigan Media, sued to intervene and obtain them.

I suspect a much fuller picture will emerge when the full affidavits for the seizure warrants are released. That should be very soon, since the civil forfeiture suit the Government filed on Friday when it filed the new criminal Indictments states that the affidavits are attached as exhibits to the complaint. While the civil complaint is available online, it’s not yet on PACER. Once it’s on PACER, the affidavits for the seizures, which are attached as exhibits, should also be available. (The SDNY is very slow getting documents on PACER for some reason. Other places, the documents are available the minute they are filed.)

In any event, Rennick seems to be a part of the story of the new case. Whether he provided information to help the Government remains to be seen.

Tomorrow, the NFL Pro Football Hall of Fame Selection Committee will meet in North Texas and elect the Hall of Fame Class of 2011. Results will be announced at 7 p.m. ET during an NFL Network special. There are 5 spots for 15 nominees.

Ed Sabol, the founder of NFL films, is one of the finalists. Here's one view of why he should receive the award. Here's another and another and another. As CNN says, “Through Ed Sabol's lens, the NFL and its players became mythic.”

“Big Ed”, as he's known, is now 95 and lives in Scottsdale, Arizona. CNN says he's playing down the idea of being elected to the Hall of Fame and “fully satisfied with a career of bringing the drama of Sunday's gladiators to America's TV screens.” I don't think so.

Ed's daughter, Blair Sabol, the irreverent fashion writer once known as the Abbie Hoffman of Seventh Avenue , (and my principal reason for reading the Village Voice back in those days) is Ed's daughter and my friend. Blair tells me the Hall of Fame award is a huge deal and would mean the world to Ed. They are keeping their fingers crossed for tomorrow.

So if any of the 44 people who vote tomorrow are on the fence and wondering if it would mean a lot to Ed, please know that it does.

NFL Films revolutionized televised sports. And without it, there would be no visually recorded history of what happened at games through the years, no way to look back and re-watch the great moments. As one writer said, “You can't tell the history of the NFL without including Ed Sabol and NFL Films.”

Via USA Today:

NFL Films contains more than 100 million feet of footage, including 9,000-plus games. It has won nearly 100 Emmy Awards….Unlike baseball, the Pro Football Hall of Fame does not have a special category for non-players who made significant contributions to the sport.

….”Take all of the other candidates, stack their accomplishments, and they haven't had the impact on the game that Ed Sabol has,” said Paul Domowitch of the Philadelphia Daily News, a Hall selector campaigning for Sabol. “It wouldn't be the incredible monolith it is without NFL Films.”

I'm keeping my fingers crossed for Big Ed too.

Some in depth writing on the Tour will come tomorrow.

The more interesting game to me is Argentina vs. Nigeria. While this is not a vintage Nigeria team, Argentina seems a train wreck waiting to happen to me. The problem is Maradona. It is lunacy to have him as team manager. that said, when you have the best player in the world, Messi, and other top players like Milito, it is hard to see you losing. But I see it. Nigeria shocks Argentina.

A post n USA -England comes later.

England is one of the tournament favorite and features one of the best players in the world in ManU’s Wayne Rooney. England is a heavy favorite in the group and with good reason – it is filled with all star players. However, England has 2 major problems – its keepers are pedestrian at best and Rio Ferdinand is injured. Nonetheless, this is a weak group and England should easily sail through to the next round.

Slovenia surprised Russia to qualify for the Finals. But it is certainly no powerhouse and is at best the third favorite on the group.

Algeria came through by knocking off African power Egypt. Again, it is weaker team who is not likely to go through, absent a big slipup by the United States.

My picks – 1- England, 2- US, 3- slovenia, 4 – Algeria.
]]> http://www.sportsleft.com/?feed=rss2&p=113 0 http://www.sportsleft.com/?p=108 http://www.sportsleft.com/?p=108#comments Thu, 10 Jun 2010 18:34:55 +0000 BTD http://www.sportsleft.com/?p=108 The World Cup starts tomorrow morning with the host country South Africa facing Mexico. The other game tomorrow will be in the afternoon, Uruguay v. France. Before we get to our daily game by game previews, I’ll start with my picks for qualifying out of the 8 groups.

Group A – France, Uruguay, Mexico and South Africa.

France is the obvious established power of the group (yes Uruguay has won 2 World Cups, but that was a long time ago (1930 and 1950.) However, not only did France limp in to the World Cup through a controversial handball by Thierry Henry, they have been rife with controversies, on and off the field. France’s strongest player is Ribery. While I do not expect much from France in this World Cup, this is a weak group, so I expect them to get through.

Joining them will be Mexico. Mexico has been the one of best teams in the Western Hemisphere for the last year. They have skilled players and less pressure than usual. I expect a strong performance from Mexico. Certainly getting out of Group A.

Uruguay has two top forwards in Suarez and Forlan. But it won’t be enough. South Africa is simply not in the class of any of the other teams in the tournament.

My picks: Mexico 1st, France 2nd, Uruguay 3rd, South Africa 4th.

GROUP B – Argentina, Greece, Nigeria, S. Korea

The best player in the world today is Leonel Messi. The worst team manager in the world today is Diego Maradona. Messi is the star player for Argentina. Maradona is the team manager for Argentina. Do the math. Mucho polemica.No tranquilo. One way or another, Argentina will be one of the biggest stories of this World Cup, boom or bust.

Greece’s team record for the past 6 years has been impressive. Certainly in this group they are a dangerous team.

Will Nigeria carry the hopes of Africa in the first World Cup held on the continent? They have horses, especially up front and have performed well on this stage in the past.

South Korea is a disciplined team but it will require a stumble by other more talented teams.

My picks? I think Greece definitely gets through. Argentina SHOULD get through.But who the hell knows what they will do. The match to watch in this group? How about the first one on Saturday – Argentina v. Nigeria. The winner will join Greece getting through the group. I think . . . . Nigeria. Polemica sure to follow.

The Key Players. You will hear a lot about Landon Donovan (“Donovan is the key to success or failure for the U.S. in South Africa”), arguably the best player the US has ever produced, and Jozy Altidore,the new hope. But for my money, how far the US goes in the World Cup will depend on Clint Dempsey, the most instinctive scorer on the team.

The likely starting side for the US will include Tim Howard in goal (who plays in the English Premier League), an apparently now healthy Oguchi Onyewu, who is a terrific center back and member of A.C. Milan. The rest of the US defenders – Carlos Bocanegra, Steve Cherundolo, Jonathn Spector, Jonathan Bornstein et al are simply not very good imo.

The midfield is the strength of the team, with Donovan (who plays for the Galaxy but had a great run with Everton of the English Premier League in January), Dempsey (a star for Fulham in the Premier League), the coach’s (Bob Bradley) son, Michael Bradley, and Stuart Holden are the starting four in midfield.

Bradley will almost certainly use a 4-4-2 set up with Donovan and Dempsey expected to move forward a lot. For the 2 forwards, it appears that Bradley will go with Altidore and Robbie Findlay. I hope we see a lot of Hercules Gomez, leading the Mexican League in scoring, and Edson Buddle, who leads the MLS in scoring. I firmly believe in “hot” scorers. The US has no Christiano Rinaldo or up top strikers of the old school, Gerd Muller type – so I hope Bradley is willing to play the hot hands up front.

The US is is Group C, with pre-tournament favorite England, Algeria and Slovenia. 2 teams will go through from the group, and the US is the second choice. Then again, the US was expected to go through to the second round in 2006 and did not. And in 2002, it was not expected to advance but made it to the quarterfinals (and should have won the match over Germany). So “expectations do not mean much for the US.

We’ll have a better idea what to expect from the team when we see how the look against England on Saturday, June 12.

Two time Tour de France winner Alberto Contador acknowledged that he arrives in good form for the next edition of Paris-Nice. [. . .] in which he will compete with the Olympic champion, Samuel Sánchez, the last winner of the Vuelta de Espana, Alejandro Valverde, and Luxemburger Franck Schleck, among others. [. . .]

“I am in good form, although I’ve done little training since the Vuelta al Algarve. I had a chill, a consequence of the rain in Portugal, but despite that I think I am in good form,” said Contador.

In last year’s Paris-Nice, the cyclist from Pinto (Madrid) suffered a spectacular meltdown, but he say he has no desire to “avenge” last year’s result. “That was a valuable experience that taught me that you never be careless about anything and you must be calm and calculating about all aspects of a race.” said Contador.

The Astana leader stated that [. . .] his team “intends to fight for the victory and to be in the fight, although it will be difficult to win. There are strong cyclists, like Luis León [Sanchez] or Valverde, who have more days of competition this year. Alejandro already knows what winning feels like this year,in the tour of the Mediterranean and raced in Australia and Almería. At the beginning of the year, recent race competition is very notable. But in a race like París-Nice, the group of favorites is wide.. Here are included Samuel Sánchez, Frank Schleck, Sandy Casar o [Sylvain] Chavanel”, said Contador.

In his view, París-Nice 2010 could be decided by a narrow margin and pointed to the climbing finish in Mende as “short and explosive.” “We climbed it in 2007 and the differences were minimal. This year the race will be decided by a few seconds and the bonuses will be important. The last 3 days in the mountains will be difficult to control. The podium placements will be a question of seconds,” Contador said.

To achieve victory [in Sunday's time trial prologue], Contador will be counting on his new time trial bike, which is being shipped from the US. “I will time trial as well as I can given the course. It has no climbs, it is flat for most of the 8 kms. Despite this, I expect to be among the leaders. Last year I won the time trial but I don’t think I can repeat that this year, ” Contador said.