The DOJ has laid out more of its case against Isai Scheinberg, Ray Bitar, et al — in a 58-page response to the response from two Black Friday indictees, payment processor Chad Elie and the Utah banker John Campos.

The People vs. Online Poker

Among other denials, Campos and Elie sought to get much of the case thrown out on the grounds that the UIGEA is a bad law and/or poker isn’t gambling. With the action back on the DOJ, Preet Bharara assistant Arlo Devlin Brown delivers some rather compelling legal composition (the best writing is in the footnotes, imho) that reads like a big STFU from SDNY … with a message of hey, better watch it or we could indict the whole damn poker industry!

I’m paraphrasing, obv … but here’s the full Government’s Response to Defendants’ Pre-Trial Motions. They purport to have a mountain of evidence ready for trial … and show a century’s worth of precedent to snuff out any hopes that poker people could actually win this case.

With the standard disclaimer of “I’m not a lawyer but …” some fascinating elements include:

More…

We showed you the 52-page criminal complaint — 9 charges against 11 individuals facing between 5 and 30 years in prison. Now here’s the 80-page civil complaint in the DOJ vs. PokerStars, FullTilt, AP/UB, et al:

http://www.scribd.com/doc/53170382/3bb-Civil-Complaint-DOJ-vs-PokerStars-Full-Tilt-UB-AP-et-al

The Feds’ allegations tell a rather compelling narrative of illegal gambling, bank fraud, money laundering, and conspiracy to circumvent US law — that if proven calls for the forfeiture of not just domain names, but also:

$1.5 billion from PokerStars
$1 billion from Full Tilt
$500 million from UB/AP

The court documents also spell out the details on the 76 bank accounts money allegedly passed through … in multiple countries and currencies, making USA vs. PokerStars+ not just a federal case but also an international one. And with the US Feds seeking to freeze these accounts, industry types get a hint of which Stars- and Tilt-funded paychecks may soon be in jeopardy … if they aren’t already.

With the criminal indictment and civil complaint together, federal prosecutors Arlo Devlin Brown and crew, seem unafraid to telgraph their intent: People have to go to prison and we take their money, but if that’s not gonna work, we’re at least gonna get $3 billion guaranteed … and we now have two tries to take it down!

(I use the term we because these cases are technically “the people of United States of America vs.” … thus it really is you and I and my dad and grandma and her priest and the electrician and Bristol Palin and Justin Bieber … claiming that all those online poker spoils are rightfully ours.)

The regulated online poker-only “Reid bill”, if you recall, promised to generate $1 to $4 billion a year for the US government. So you gotta figure $3 billion in forfeitures buys another year for the forces who do wanna see fully legal licensed and regulated online poker — and other casino games — to craft a bill to their liking.

A US District Judge has granted Costigan Media — the folks behind Gambling911 — their request to unseal seizure warrants and (heavily redacted) court documents related to the seizure of some $34 million that US attorneys allege are ill-gotten gains from illegal online gambling.

This is a semi-significant ruling because while the First Amendment has stood up for such requests in most criminal prosecutions, there is less case law directly addressing matters of civil forfeiture, according to Judge Laura Taylor Swain … but ultimately, yes, when thousands of American citizens are having funds they believe to be theirs seized by the government, yes, the public has a right to know what’s going on.

Click here for 49 pages of freshly released legal documents, not all of which look like this:

The losing side, btw, in this mini case-within-a-case are ultimately the same Manhattan federal prosecutors who followed up these payment processee seizures with an indictment against Douglas Rennick — the Canadian payment processor who faces more than 50 years in prison (cumulative), $1.75 million in fines, and the forfeiture of nearly $566 million on charges of fraud, money laundering, and illegal gambling operations for his doing business with websites such as Full Tilt, PokerStars, Ultimate Bet, and others.

That indictment, of course, may or may not have come coincidentally on the same day Sen. Robert Menendez (D-NJ) introduced a Senate bill that would effectively make all the issues being adjudicated above moot in the future.

Regardless of what’s in play there, I think it’s clear why, indeed online poker related money issues really can’t be handled in the shadows — as much as some federal prosecutors would like such transactions to stay that way.

The Associated Press is at least paying attention to the developments reported here on Pokerati in what is sure to be a complex legal situation — one that already is bringing up not just legally questionable issues of non-brick-and-mortar gambling, but also money laundering. They also clear up some of the details about who got tagged and how:

Documents obtained by the AP show that a judge in the district issued a seizure warrant last week for an account at a Wells Fargo bank in San Francisco, and that a federal prosecutor told a bank in Arizona to freeze an account.

In a letter dated Friday and faxed to Alliance Bank of Arizona, the prosecutor said that accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture “because they constitute property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Arlo Devlin-Brown, the assistant U.S. attorney for the Southern District of New York.

In another letter faxed the same day, Devlin-Brown asks that the bank treat the funds “as legally seized” by the FBI, saying that the government has probable cause that the gambling payments of U.S. residents had been directed to offshore illegal Internet gambling businesses.

Meanwhile, the British press is reporting:

America might be about to loosen its gambling corsets

These two stories aren’t as mutually exclusive as they might seem. Often, when times are changing, old holdovers from a previous philosophical era will turn uber-aggressive with their means and methods trying to give their way one last shot, and at a minimum hoping to take a few folks down with them as their kind are pushed out.

That’s certainly plausible considering how emphatic bureaucrats in the DOJ have been about the illegality of online poker/gambling even when the people and courts have repeatedly disagreed.