Rogue Payment Processor Arrested in Las Vegas
Accused of Laundering Full Tilt, PokerStars, UB Money First criminal indictment for UIGEA violations
Dude … it’s gettin’ hot here in the US … specifically in Las Vegas.
Yesterday federal authorities arrested Daniel Tzvetkoff, a 27-year-old Australian national “on charges that he assisted illegal internet gambling companies by processing approximately $500 million in transactions between U.S. gamblers and internet gambling websites and disguising the transactions to the banks so that they would appear unrelated to gambling,” according to a statement from the DOJ’s Southern District of New York.
Illegal internet gambling companies? Yikes …
Tzvetkoff, as founder of Intabill and ACH System, faces up to 75 years in prison for bank fraud, money laundering, conspiracy to operate and finance an illegal gambling business, and … get this … for processing fund transfers in violation of the UIGEA.
I’m pretty sure that’s the first ever indictment to bring up UIGEA charges.
About a year ago the Australia Courier-Mail reported that Tzvetkoff owed Full Tilt, PokerStars, Ultimate Bet, and Absolute Poker more than $30 million as the overextended, ostentatious Gen-Y tycoon’s personal empire was crumbling. Then, Full Tilt (through Kolyma Corporation) sued Tzvetkoff in Australian Court, saying his company Intabill owed them $52 million.
Before his arrest, he was saying Full Tilt tricked him into a bad deal and his lawyer doublecrossed him. He blamed the economy for a multi-multi-millionaire having to declare bankruptcy earlier this year. More on the pre-arrest rise and fall of an online poker payment processor here.
I mean for chrissakes, he drove a Lamborghini with the license plate “BALLER”! And when a bank repossessed a competitive race car of his, they got everything except its $100k engine, which had been stripped out and hidden.
Click below for the official word from the DOJ:
United States Attorney Southern District of New York
FOR IMMEDIATE RELEASE
APRIL 16, 2010AUSTRALIAN MAN CHARGED IN MANHATTAN FEDERAL COURT
WITH LAUNDERING HALF BILLION DOLLARS
IN INTERNET GAMBLING PROCEEDSPREET BHARARA, the United States Attorney for the
Southern District of New York, JOSEPH DEMAREST, JR., the
Assistant Director-in-Charge of the New York Office of the
Federal Bureau of Investigation (“FBI”), and JAMES T. HAYES, JR.,
the Special Agent-in-Charge of the Department of Homeland
Security’s United States Immigration and Customs Enforcement
(“ICE”), announced that Australian national DANIEL TZVETKOFF was
arrested in Las Vegas this morning on charges that he assisted
illegal internet gambling companies by processing approximately
$500 million in transactions between U.S. gamblers and internet
gambling websites and disguising the transactions to the banks so
that they would appear unrelated to gambling.According to an Indictment unsealed this morning in
Manhattan federal court:In early 2008, TZVETKOFF began processing gambling
transactions in the United States through the Automated Clearing
House system (“ACH system”) which allows money to be
electronically transferred from a gambler’s U.S. checking account
to an internet gambling company simply by the gambler going to
the internet gambling company’s website and entering his bank
account information. TZVETKOFF and his co-conspirators processed
more than $543 million in ACH transactions between February 2008
and March 2009, the overwhelming majority of which were on behalf
of internet gambling companies. TZVETKOFF then arranged for the
funds received from gamblers to be wired offshore for the benefit
of the gambling companies. TZVETKOFF also invested approximately
$27 million from these ACH transactions into an online “payday
loan” company that offered consumers high-interest, short term
loans that typically carried an annualized interest rate of more
than 500 percent.TZVETKOFF and his co-conspirators induced U.S. banks to
provide ACH services to internet gambling companies by disguising
the transactions so that they would not appear to be gambling
related. To accomplish this, TZVETKOFF and his co-conspirators
created dozens of shell companies with names unrelated to
gambling — complete with phony web sites that made the companies
seem legitimate — and represented to banks that the ACH
transactions were on behalf of these companies. On May 3, 2008,
one of TZVETKOFF’s co-conspirators in an email told TZVETKOFF
that he had hired programmers to develop “unique” websites for
the shell companies so that if someone was “checking the
companies out there is absolutely no way to tie the companies
together.” TZVETKOFF responded: “This is all perfect!”In March 2009, TZVETKOFF stopped processing internet
gambling transactions after leading internet gambling websites
accused him of stealing approximately $100 million from them.The Indictment charges TZVETKOFF with four counts,
including bank fraud, money laundering, and conspiracy to operate
and finance an illegal gambling business and to process
electronic funds transfers in violation of the Unlawful Internet
Gambling Enforcement Act of 2006. If convicted of all counts,
TZVETKOFF faces a maximum sentence of 75 years in prison.
TZVETKOFF, 27, was arrested this morning in Las Vegas
and is expected to be presented in Las Vegas federal court later
today. This case has been assigned to United States District
Judge LEWIS A. KAPLAN.Mr. BHARARA praised the investigative work of the FBI
and ICE for their assistance in the investigation. Mr. BHARARA
said that the investigation is continuing.Assistant United States Attorneys ARLO DEVLIN-BROWN,
JONATHAN NEW, and MICHAEL LOCKARD are in charge of the
prosecution. This case is being handled by the Office’s
Organized Crime Unit.The charges contained in the Indictment are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.10-130
###
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Pauly says:
April 17th, 2010 at 5:52am
The last official line is the best… “The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.”
BJ Nemeth says:
April 17th, 2010 at 5:53am
Holy crap, this is big …
My primary question is how many different gaming sites did this guy’s company transfer funds to? If it was *just* poker sites like Full Tilt and PokerStars, then this is exceptionally bad news for us.
But if he also transferred funds to more traditional forms of gambling (online blackjack, online roulette, and especially online sports betting), then the onus isn’t strictly on poker — something small in our favor.
Does anyone know? I don’t have time to do any research today.
@alexpokerguy says:
April 17th, 2010 at 6:31am
Does this not have a silver lining? In a bass-ackwards way it promotes regulation as opposed to broad illegality. This guy is simply ‘the mob’ version of payment processing. I’m sure that sites would appreciate consequential protection from future payment processing hoodlums. At the end of the day, how many poker players list a single dollar bc of him? Might not be as awful for the industry as we think, if we’re looking for gov’t inclusion in the industry. PS. Brilliant photo selection! Douchebag reekage.
Hibelu says:
April 17th, 2010 at 6:52am
Mhm, yes indeed. I do picture this guy with a pink popped collar.
Bryce says:
April 17th, 2010 at 9:44am
BJ, I found this article that mentions GoldenPalace.com as one of the sites he also owed: http://onlinecasino6.com/online-casino-news/trouble-for-e-cash-processor-intabill.html I guess that’s a bit of a silver lining?
Brandon says:
April 17th, 2010 at 9:48am
Nice article Dan, but I feel like “for processing fund transfers in violation of the UIGEA” might be inaccurate. Sounds like he’s violated some other internet gambling laws but can he be charged for violating UIGEA if it hasn’t been implemented yet?
Short-Stacked Shamus says:
April 17th, 2010 at 11:14am
It is curious that the DOJ release lists violating the UIGEA among the charges.
The UIGEA been in effect since Jan. ’09, although compliance (by banks, financial institutions, etc.) is not yet mandatory (will be 6/1/10, barring any change). I could be missing something, but it seems like as someone who processed transactions between sites/players Tzvetkoff (like other banks, etc.) can’t yet be found guilty of violating the UIGEA.
DanM says:
April 17th, 2010 at 1:39pm
@brandon i think it’s pretty clear in there … DOJ has four charges against him, and one of them happens to include violating the UIGEA.
It’s confusing because the UIGEA has been in effect since 06, actually — they’ve just never prosecuted anyone on that (presumably because they hadn’t completed or started any investigation at that point). The June 1 enforcement deadline isn’t a date that the law officially goes into effect — it’s just the date that the banks are required to do their own policing of it lest they begin to face charges of some sort for facilitating the transactions.
DanM says:
April 17th, 2010 at 2:58pm
@alexpokerguy i’m looking for the silver lining beyond just the zen of hey, if shit happens, it happens …
What I think is interesting is that the two American-facing payment processors that have been arrested — this guy and Schuett — are both foreign nationals with sketchy records as payment processors. (Shocking, hard to find honest businesses to process money in a way that tries not to show where funds originally came from or were headed to.)
By going after these two guys, the DOJ helps assure that these are not characters that will generate huge amounts of public support or outcry, as would be the case if, say, hypothetically, members of Team Full Tilt got cuffed.
Also, by making Tzvetkoff the first arrest with a UIGEA charge against him, the DOJ assures we’ll have a hard time pronouncing his name on The Poker Beat.
DanM says:
April 17th, 2010 at 3:09pm
and look, already you guys are buying into the notion of hey, this is just a bad payment processor. do you know personally of any GOOD payment processors? meaning totally legit companies that aren’t trying to hide from anyone or be surreptitious about how they get money into and out of sites? not saying they don’t exist … i just personally don’t know any. not one. for all the people i’ve met in every quadrant of this industry have never come across a single “good guy” saying, “hi, i’m so and so … i’m a payment processor.”
We may not like it, but calling a spade a spade, it’s possible that we may all live in the middle of what just happens to be a huge money laundering operation. Think about that …
One thing that is clear from these two cases is that the Feds know how it all works now — no more secrets about the payment processing system. That’s my read.
Kevin Mathers says:
April 17th, 2010 at 3:12pm
How about Douglas Rennick, currently residing in Canada.
DanM says:
April 17th, 2010 at 3:19pm
Right. Though Rennick is not in custody, right?
It’s an interesting progression … Rennick, Schuett, Tzvetkoff … who’s next?
Each one of these guys have progressively more and more dirt on them, and more and more of a closer connection to the companies we all know so well.
Also, threatening 75 years … that’s pretty big. And I think possibly a way of negotiating with those who might be looking to “buy out” of a prosecution. Basically saying, take your offer of $20m and 6 months in jail and shove it up your ass. No one’s gonna be clean without spending at least 5 years in prison and paying a super-hefty shitload.
Again, not saying that’s how it is .. that’s just my read on the sitch, which obviously could be wrong.
Anonymous says:
April 18th, 2010 at 5:52pm
I worked for this guy last year. I was in customer support and answered the calls for the people using our service. We had an online “Phone card” for people to put their money into who then put their money into the gambling sites. Im all for this guys arrest, he laid off more than half his company without nocice, I think he gets what he deserves. FYI to BJ Nemeth We processed transactions for Full Tilt, Pokerstars, Ultimate Bet and a couple of other smaller companies.
SCOTT DIAMOND says:
April 18th, 2010 at 9:06pm
It would not surprise me if Full Tilt is working with the DOJ for some type of immunity in this case. Why you ask? he took 52 Million dollars of their money and they want justice!
Don’t laughI have seen some crazy cases in my time! 🙂
DanM says:
April 18th, 2010 at 9:50pm
Yeah, I actually buy that theory as a possibility.
But my gut tells me they WISH it could be that easy — because this kid is likely to roll over in a second and give up potentially incriminating info if it could help him plea down some time.
Baller’s got no money no more, so DOJ ain’t expecting him to cough up the mega-millions like the Neteller and BetonSports dudes, or even the old PartyPoker crew for that matter. All batter’s got left worth anything is information that could help bring in more prize convictions.
stone18 says:
January 15th, 2011 at 10:09pm
Dude