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Federal prosecutors today unsealed a sweeping indictment against Isai Scheinberg and Raymond Bitar, founders of the world’s biggest online poker companies, and moved to try to shut down their businesses. The indictment filed by Preet Bharara, the U.S. Attorney in Manhattan, charges Scheinberg, the founder of PokerStars, and Bitar, the founder of Full Tilt Poker, as well as nine other individuals, accusing them of operating illegal gambling businesses. Federal prosecutors also filed a civil lawsuit seeking $3 billion in civil money laundering penalties, alleging the online poker companies disguised money they received from U.S. poker players as payments to online merchants selling jewelry and golf balls.

The U.S. Attorney in Manhattan moved to try to shut down the online poker business in America by seizing five Internet domain names, including pokerstars.com and fulltiltpoker.com, used by the three main companies facilitating online poker games in the U.S. In addition, a federal judge issued a restraining order against 76 bank accounts in 14 countries utilized by those online poker firms. The indictment sets up a complicated global legal battle between the Department of Justice and the online poker entrepreneurs who have long argued that their operations in the U.S. do not violate U.S. law. Indeed, in recent days, one of the nation’s most prominent casino billionaires, Steve Wynn, announced a strategic relationship with PokerStars and said “in the United States of America the Justice Department has an opinion but several states have ruled and courts have agreed that poker is a game of skill, it’s not gambling. PokerStars rests their argument on that.”

But in a 51-page indictment filed in federal court in Manhattan, federal prosecutors allege that PokerStars, Full Tilt Poker and Absolute Poker, “used fraudulent methods to avoid restrictions and to receive billions of dollars from United States residents who gambled.” The indictment largely focuses on financial transactions, claiming the online poker companies violated a 2006 law that Congress passed to cut off the flow of cash to online gambling companies, saying the firms “deceived or directed others to deceive United States banks and financial institutions into processing billions of dollars in payments.”



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Here is the complete Department of Justice Indictment regarding the seizure of Pokerstars, Full Tilt Poker & Absolute Poker Domains and the blocking of these domains for poker players in the USA.

UPDATE

- Full Tilt’s Onyx Cup has been cancelled at least temporarily but most likely forever. Full Tilt Poker has not yet released any official statement regarding the Onyx Cup

- ESPN has removed the PokerStars sponsored “Inside Dea”l from the ESPN.com website. Nothing official has came from the network yet. The ESPN Poker Club which was powered by PokerStars is no longer available.

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