By Shari Geller and Lou Krieger
The reaction to the shocking full-frontal attack by the Department of Justice against online poker has been coming in since the indictments were unsealed on April 15th. In this two-part series, we will look at some samplings of quotes and written statements about Black Friday. First up, quotes from those most interested – the government representatives and the poker sites.
The Government Had Its Say
Manhattan U.S. Attorney Preet Bharara, who brought the indictment, was the first to spin the story: "As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits. Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”
Janice Fedarcyk, FBI assistant director in charge, said: "These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck." She added, "They lied to banks about the true nature of their business. Then some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”
Former federal prosecutor Timothy Treanor, who had prosecuted the government's case against payment processor NETeller, also weighed in. “The recent indictment is the latest attack by the U.S. government on a multibillion-dollar industry that accesses U.S. customers from outside of the U.S. using the Internet. The degree to which these companies allegedly compromised the U.S. payment system through deception and bribes is astonishing and should serve as a caution to any business that transfers money internationally."
The Online Poker Sites Responded
After news of the indictments broke, Full Tilt Poker released a statement after the government seizure of their domain name, saying:"Unfortunately, as a result of this action, Full Tilt Poker has decided that it must suspend 'real money' play in the United States until this case is resolved. However, Full Tilt Poker will continue to provide peer-to-peer online poker services outside of the United States."
Full Tilt also addressed the issue of US players’ money: "In light of recent events involving the freezing of certain accounts, Full Tilt Poker would like to assure all players that their funds remain safe and secure. Processing of both deposit and withdrawal requests is proceeding as normal and is still available to all of our players.
The statement went on to add: "Full Tilt Poker remains committed to the protection of our players’ security and legal rights, and will continue to provide the best and safest online poker room available worldwide."
PokerStars also released a statement, of more comfort to international players than US ones, following the news: “As you may have heard, we have had to suspend real money poker services to people based in the US due to legal developments there. The developments are confined to the US and do not have any impact on your ability to continue using our services. Please be assured player balances are safe. There is no cause for concern. For all customers outside the US it is business as usual.”
Most Recent Statements from the Online Sites
After the dust settled, both Full Tilt and PokerStars entered into separate agreements with the Department of Justice with respect to retaining the right to use their dot com names and the repayment of U.S. players’ deposits.
U.S. Attorney Bharara was quoted as denying the DoJ’s action ever risked players’ funds, saying, “No individual player accounts were ever frozen or restrained, and each implicated poker company has at all times been free to reimburse any player's deposited funds. In fact, this Office expects the companies to return the money that U.S. players entrusted to them, and we will work with the poker companies to facilitate the return of funds to players, as today’s agreements with Poker Stars and Full Tilt Poker demonstrate."
The two companies also issued their own statement following the agreement and changed the home page of their dot com websites to notify visitors of the status. Full Tilt, disagreeing somewhat with the statement made by the Justice Department, said, “Full Tilt Poker has no accounting of the millions of dollars of player funds that were seized by the government.”
Nevertheless, the clear intention of Full Tilt’s statement was to reassure US players that they would ultimately get their deposits returned. Here is their entire statement following their domain name agreement with the Justice Department: "Full Tilt Poker™ is pleased to announce that it has reached an agreement with the United States Attorney’s Office for the Southern District of New York to regain the use of its worldwide domain name, www.fulltiltpoker.com.
“Although players in the United States will not be permitted to engage in real-money play, the agreement expressly allows for real-money play outside of the United States. In addition, the agreement represents an important first step towards returning funds to U.S. players because it allows Full Tilt Poker to utilize its domain to facilitate the withdrawal of player funds. But, unfortunately, there remain significant practical and legal impediments to returning funds to players in the immediate future.
“As a result of the recent enforcement action, there exists no authorized U.S. payment channel through which to make refunds; Full Tilt Poker has no accounting of the millions of dollars of player funds that were seized by the government; and the government has not agreed to permit any of the seized player funds to be returned to the players.”
Poker Stars was less equivocal in their statement and assured players that their funds would be returned. “PokerStars is pleased to confirm that the US Department of Justice has agreed to release the www.pokerstars.com domain name for use by PokerStars outside the US. The company categorically denies the allegations brought by the US Department of Justice on 15th April 2011 and is taking all steps necessary to robustly defend itself, and the two named individuals. Meanwhile, the company has stopped offering real money poker services in the United States.
“PokerStars' services outside the US are not affected. The Company has received assurance from the Isle of Man regulator that its license status is unchanged. The company remains compliant with all of its other international licenses. Following discussions with the US Department of Justice, PokerStars has now entered into an Agreement which has been publicly filed. The US Department of Justice Agreement expressly states that the domain name can be used by PokerStars outside the US to facilitate the provision of real money poker services, and that PokerStars can pay out player balances to its former customers in the US.
"Returning US players' funds is a top priority for PokerStars and the company can now start the process of returning money to its former US customers. All PokerStars player deposits are completely safe. The Isle of Man's strict licensing laws (similar to other jurisdictions where PokerStars holds licenses) require all funds to be held in accounts that are segregated from company assets. PokerStars has always complied with this requirement and continues to do so. This money is readily available to meet withdrawal demands, indeed the company continues to comply with withdrawal requests from players based outside the US as normal. Outside the U.S., PokerStars continues to operate business as usual."
A little late to the party is the third involved site, Absolute Poker, who has not yet reached its own agreement with the Feds. It did, however, provide the following interim statement: “Absolute Poker has retained Blank Rome LLP as United States counsel to provide legal advice in relation to civil and criminal matters filed in federal court in Manhattan and made public on April 15, 2011. Absolute Poker is aware that on April 19, 2011, the US Attorney for the Southern District of New York entered into separate agreements with FullTilt Poker and PokerStars. These agreements concern the use of the respective www.fulltiltpoker.com and www.pokerstars.com domain names. The US Attorney, in a press release dated April 20, 2011, stated that the government is willing to enter the same agreement with Absolute Poker and UB.
“At this time, Absolute Poker’s top priority is, and must be, the refund of balances to its and UB’s US players. However, given the far-reaching consequences of the US Attorney’s actions for Absolute Poker and for the entire poker community, Absolute Poker believes that the responsible course of action is to review with its attorneys the relevant court filings before taking any action.”
“Absolute Poker believes that the US Attorney shares the view that refunds to US players are an immediate and pressing concern, and Absolute Poker wishes to make clear that it wants to work cooperatively with the US Attorney to safely and efficiently return its players’ funds. To that end, Absolute Poker’s counsel has initiated communications with the US Attorney’s office and plans to continue proactively advancing those discussions."
“Further information and timely updates will be provided to Absolute Poker/UB’s players as we move forward.”
In the next article, we will examine some quotes from around the poker world from during the immediate aftermath of the DoJ's actions and as some time for reflection has passed.