Online Poker Gambling Seizures – PokerStars, Full Tilt, Absolute Poker

This is what users saw when trying to view PokerStars, Full Tilt Poker, and Absolute Poker last Friday. According to Alexa.com, traffic stats, hits to the website tripled.

Last Friday (at around 1:30 pm), I got a call from a private investigator in Costa Rica, who said the U.S. Government’s FBI just killed Costa Rica today! This is huge news!

My friend continued with the outraged about how the FBI put over 4,000 Costa Ricans (we heard reports that this may be up to 20,000) out of work when the online poker world was shaken as the owners of the three largest online poker sites were seized and websites shut down.

PokerStars (who started in Costa Rica and now operates in the Isle of Man, a British Crown dependency),  Full Tilt Poker (registered in Alderney)  and Absolute Poker (who operates out of Costa Rica) — were charged with violating the Unlawful Internet Gambling Enforcement Act – operation of illegal gambling business, conspiracy to commit bank and wire fraud and money laundering conspiracy.

Wow, those are some heavy charges!

The Feds seized 5 domain names, and are seeking recovery of $3 billion from the companies and issued an order restraining approximately 76 bank accounts in 14 countries containing the proceeds.

From then on, my cell was ringing endlessly. News of the seizures spread faster then a tsunami, with many expressing the pros and cons of the US government action.

Former Sen. Alfonse D’Amato of New York, who chairs an advocacy group called Poker Players Alliance, issued a statement: “On behalf of the millions of poker players across the country, we are shocked at the action taken by the U.S. Department of Justice today against online poker companies and will continue to fight for Americans’ right to participate in the game they enjoy,” he said. “Online poker is not a crime and should not be treated as such.”

But others in Congress oppose.  Critics say that allowing online gambling to flourish could cause great harm, including to people who don’t have lots of money to burn. A University of Illinois professor John Kindt calls online betting “the crack cocaine of gambling, putting it in every living room, on every school desk and work desk, and on every iPhone and BlackBerry.”

In reality, all these pro and con statements have missed the major point!

Let’s get something perfectly clear; it is not the online gambling business itself, it is all about how payments are channeled through Payment Processors.

Interesting point!

A payment processor is a company (often a third party) appointed by a merchant to handle credit card transactions for merchant banks. They are usually broken down into two types: front-end and back-end.

Front-end processors have connections to various card associations (like off shore companies, who provide pre-paid debt cards)  and supply authorization and settlement services to the merchant banks’ merchants.

Back-end processors accept settlements from front-end processors and, via The Federal Reserve Bank, move the money from the issuing bank to the merchant bank.

In the past few years, there have been numerous seizures and indictments of payment processors in the United States when it is discovered that the money goes to help finance terrorism or other illegal acts.

The Unlawful Internet Gambling Enforcement Act  (UIGEA) of 2006 prohibits Americans from using credit cards, electronic funds transfers, or checks to finance Internet gambling activity and the bill was attached with the Congress SAFE Port Act, which was written to increase security of U.S. Ports.

“It’s important to note, the act deals only with how Internet gambling accounts are funded, not the actual betting.  Lawrence Walters, an Internet gambling law attorney, appeared on PBS’ NewsHour show and stated, “The bill has no impact on the individual player’s activity.”

As any law enforcement agency knows, the first rule of thumb in any criminal activity is “Follow the Money.”

According to the first 24 pages of the indictment, it accurately details how the three did their “payment processing”   and this is what sparked the seizures.

The government can track down the money financing terrorism – and that’s a lot more complicated than figuring out online poker payments.

Is this man (Daniel Tzvetkoff) responsible for the take down of PokerStars, Full Tilt and Absolute Poker?

Now here is the big catch and what makes this very interesting.

According to Card Chat, there may yet be another sting. An Australian newspaper Courier-Mail alleges that Daniel Tzvetkoff (who is lucky to be alive), a former payment processor, may have assisted the US government in their historic take down. Allegedly, he used to operate payments for large gambling sites, making a fortune doing so. But apparently he got greedy and ripped off the gambling companies for $100 million.

Yes, you read right, thats 100 million US dollars!

But Tzvetkoff may not be that bright, he made the mistake of traveling to the US a year ago. The FBI received an “anonymous” tip off on Tzvetkoff’s location and he was arrested and charged with money laundering, bank fraud and conspiracy for processing $543 million in illegal Internet gambling earnings through his payment processing firm, Intabill, a company founded in San Jose, Costa Rica that specializes in online pharmacies and high risk merchant accounts.

Now check this out, much of his business was conducted with PokerStars and Full Tilt Poker.  Because of his wealth he was considered a flight risk and denied bail.

Hummm, now, mysteriously, he is out on bail and the gambling companies are the ones now being scrutinized. This includes a $52 million claim from poker giant Kolyma Corporation AVV, who ironically is the bank and/or owner of Full Tilt Poker.

Regardless of whether you are for and against these online gambling websites, it is the greed, corruption, or illegal dealings that consequently affect the innocent; in Costa Rica’s case, the layoff of 1000s of hard working Costa Ricans.

Calypso Cruises