Preet Bharara, the US attorney for the Southern District of New York, today announced the unsealing of a federal criminal complaint against Robert Faiella and Charlie Shrem. It’s alleged that Faiella ran an underground bitcoin exchange on Silk Road. Shrem is well-known in the bitcoin community as the CEO of BitInstant and the Vice Chairman of the Bitcoin Foundation.
A copy of the criminal complaint against both men is here.
The complaint alleges that both Shrem and Faiella operated an unlicensed money transmitting and that Shrem specifically facilitated that business through BitInstant. Further to those allegations, Shrem is also charged with violations of the Bank Secrecy Act because of his purported wilfull failure to file reports with the Treasury Department. Finally, both men are charged with money laundering conspiracy under 18 U.S.C. 1956.
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The Department of Justice has brought in a third-party claims administrator to help eligible American online poker players reclaim funds that were lost to Full Tilt Poker after the companys access to the United States was cut off in April 2011.
U.S. Attorney for the Southern District of New York Preet Bharara said Wednesday that bringing aboard Garden City Group was a significant step forward in the process of compensating victims of the Full Tilt Poker scheme.
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Internet gaming giant PokerStars will forfeit $731 million to the U.S. government over the next three years to settle a criminal complaint with the Department of Justice, although the company admits no wrongdoing as alleged in the April 2011 “Black Friday” indictments.
Some of the settlement will be used to refund money owed to U.S. and foreign customers of the now defunct Full Tilt Poker, which was also named in the original indictments.
PokerStars, which refunded money it owed to American gamblers more than a year ago, will acquire the assets of Full Tilt and relaunch the gaming website in legal markets as a separate brand.
The settlement, announced separately Tuesday by Isle of Man-based PokerStars and the U.S. attorney’s office for the Southern District of New York, puts to rest many issues surrounding “Black Friday,” in which federal prosecutors cracked down on Internet poker in the United States, stopping three of the largest companies from taking wagers from gamblers in the United States.
PokerStars continues to operate legally in Europe and other markets where online gaming is regulated.
Under terms of the settlement, PokerStars can apply to offer Internet poker to U.S. customers if state or federal governments legalize the activity.
“We are delighted we have been able to put this matter behind us, and also secured our ability to operate in the United States of America whenever the regulations allow,” PokerStars Chairman Mark Scheinberg said in a statement. “The way we have operated our business since the U.S. Department of Justice brought its claim has underlined our credentials as a responsible online poker operator.”
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It’s all moving … Nelson Burtnick landing at Newark airport to surrender, and the DOJ puts out their word just before lunchtime across the river in New York City. Full Tilt players will have the chance to be reunited with their beloved bankrolls … all thanks to the fine and awesome work of our Department of Justice in the United States of America. Phew, now everything can return to normal, lol.
Details will be everywhere, for sure … so pick your slant and poison — whether it’s 2+2, Diamond Flush, Gambling 911, Twitter or whatever. The PokerStars spin machine got ahead of the game first with their version of near-billion-dollar events.
Read below for what the most powerful Preet Bharara DOJ has to say about it all:
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Just when the poker masses had all but given up on the latest rumor about PokerStars settling with the DOJ … In just a few sentences published early on Friday in Poker Player Newspaper, Wendeen Eolis threw fuel on smoldering embers of hope for those still dreaming of someday seeing monies attached to Full Tilt Poker.
And though some are beginning to doubt yet again after more than one full business day, Wendeen’s assertion that Stars had indeed settled with the DOJ, and that Full Tilt players will be paid back in full (and rather soon!) was enough to make this rather vocal skeptic do a double-take and re-think. I know Wendeen chooses her words carefully, and she wouldn’t move in like this without the goods unless she has gone completely off her rocker — a possibility she addresses in a follow-up PPN update.
So while the poker world awaits some semblance of official word … I‘m gathering up $60 to pay off a few possibly lost bets, as I’ve had probably a 170-degree POV flip — and now see a DOJ vs. Online Poker endgame that might-could actually include PokerStars resolving its civil matters at the same time Full Tilt and UB players get made whole!
Probably a good time to put out the disclaimer, I’m not a lawyer but … Even though I still see the notion of criminal indictee #1 buying his freedom by offering to take the assets of criminal indictee #3 off the government’s hands for a fire-sale price as rather ridiculous, here’s some recent DOJ-SDNY hand history that I believe supports what Wendeen might be suggesting:
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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:
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Rock Paper Scissors? The last time a rich French dude came to New York to bail out the Americans was
Rochambeau in 1781 — fewer than eight WSOPs before George Washington established the DOJ office currently trying to put the hurt on various Tiltboys.
Still trying to wrap my teeth around the latest chapter in the saga of the Rise and Fall of Full Tilt Poker, with the Bernard Tapie Groupe in France saying the DOJ has given them a thumbs up on the purchase of certain Full Tilt assets … with which they’ll supposedly be able to make-good with Full Tilt’s non-American players and resume non-American operations.
So if this is correct — and we can talk later why we presume more truth in this story than others before it — Preet Bharara and his top-ranked American prosecution office wouldn’t have to worry about the Euros … which would be good for the DOJ, I presume, because who needs to mess with the foreigners and the incredibly complex international litigation and trade wars they potentially bring … especially when the real prize Preet seeks is closer to $1 billion.
For a better understanding, be sure to check out Wendeen Eolis’s latest piece in Poker Player Newspaper — Decoding Full Tilt Poker – DOJ – Tapie Plans — which provides a much needed sobriety check and skillful reading between the lines. Even though she may not be on the frontlines like Subject:Poker, as a Manhattan legal consultant in her non-poker life, Eolis has been down to the battlefield a time or two … and seems to understand ways the Southern District of New York more intimately than most.
The Tapie deal does offer the first glimmers of light at the end of a long tunnel, but it seems American players might wanna hold off on calls for “ONE TIME!” lest they become self-fulfilling prophesies of disappointment and despair. Because for any justifiable exuberance over the likelihood that European and “rest of world” players might see PokerStars-style payouts before the end of 2011 … American players with online poker (bank?) accounts in limbo now know only that the DOJ will be looking at them separately in determining who’s a “victim” and who is Isildur1 who’s potentially a less deserving accomplice.
If you are out real American dollars in the Full Tilt Poker collapse, the US government is apparently your friend. That’s the message of Preet Bharara and the Department of Justice, who put out a statement to get those dumfugkers from 2+2 to stop hassling us clarify the status of player accounts in light of revelations about Full Tilt’s insolvency.
In it they spell out a process they are going through to get money from anyone who mighta suckled from the Full Tilt mother-teat, and give an indefinite timeline (months at a minimum) to tell all those thinking this could be the “final chapter”, “dude, we’re just getting started, here.”
The full DOJ statement is below, which ends with a reminder about 28 C.F.R. Part 9, the regulation that binds them.
Meanwhile, not sure if this is a good, bad, or meh-for-poker … but the DOJ is coming under scrutiny over seized assets. Just this month — after an investigation sparked by a junior prosecutor in the Southern District of New York concerned about plausible shenanigans in the remission of Bernie Madoff loot — the Justice Department’s own Inspector General cited serious deficiencies in the US Marshals’ handling of seized assets. The OIG wrote a report that reads kinda like a Full Tilt indictment … at a time when they are getting flack (from both the left and the right) for essentially abusing some 400 laws allowing them to take money and other assets from people who may or may not face criminal charges.
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