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OPPOSITION BUILDING TO FEDS ONLINE POKER BUSTS
Saturday October 8, 2011 : Banker and payment processor indicted by feds mount a fight-back
More Black Friday-related litigation has been filed in the US courts as opposition to the federal enforcement actions against e-processors, banks and operators continues to mount.
Forbes business magazine reports that a banker and an e-cash processor involved in the indictments have filed "strongly-worded" legal papers to fight the government’s charges, arguing that online poker businesses like PokerStars and Full Tilt Poker were not gambling enterprises.
"John Campos, a former vice-chairman of a Utah bank that allegedly accepted a cash infusion in return for handling online poker transactions, and Chad Elie, a payment processor who is accused of deceptively facilitating the flow of funds between U.S.-based players and online poker companies, filed separate motions to dismiss all counts filed against them in federal court in Manhattan," Forbes reports.
"It is the first direct assault on the April case the U.S. Attorney in Manhattan, Preet Bharara, brought against online poker’s biggest firms, which included the indictment of 11 individuals."
The article describes the circumstances surrounding the indictments, and points out that by filing four memorandums of law supporting their motions to dismiss, Campos and Elie are highlighting the obstacles the government is facing in litigating an online poker prosecution, giving the first glimpse of the battle ahead.
Quoting from the filings, Forbes reveals: “PokerStars and Full Tilt are not ‘illegal gambling businesses’ under the Illegal Gambling Business Act because they are not ‘gambling businesses’ at all. To be ‘engaged in the business of betting or wagering’ requires that the business has a stake in the outcome of gambling contests, and the Indictment here fails to allege that the poker companies had any such stake.” Instead, the companies charged a fee, or rake, on each hand, the filing clarifies.
Elie has filed three different memorandums supporting his motions to dismiss all charges filed against him as "flawed attempts to prosecute" by the US government.
The notorious Unlawful Internet Gambling Enforcement Act surfaces in Campos's 33-page memorandum, Forbes reports. Campos, was vice-chairman of Sun First Bank, and claims the UIGEA charges against him should be dismissed because the law exempts financial transaction providers and those working on their behalf.
The "skill vs. chance" argument regarding the fundamental nature of the game of poker is raised in the motions of both men to support the argument that poker should not be regarded as gambling.
Both defendants also flag the fact that the Illegal Gambling Business Act lists nine activities regarded as gambling that do not include poker or any other card game, claiming that poker has little in common with the games which the law cites, such as lottery or house-banked games in which the bettor has no role in the outcome like bookmaking, roulette or slot machines.
In one memo, Elie refers to congressional testimony by US Attorney General Eric Holder in which he said he was not aware of whether poker was a game of chance or skill, stating: “Indeed, the Attorney General himself has commented that determining whether poker is a game of chance is ‘beyond [his] capabilities.’”
Other arguments centre on well-trodden jurisdictional issues surrounding where gambling takes place, state vs. federal jurisdiction and "bogus" money laundering conspiracy charges. One of Elie's memorandums attacks government charges that he conspired to commit bank and wire fraud by getting banks and financial firms to process online poker transactions, disguising them to look like they were unrelated to online poker.
Elie claims that the government must prove the alleged deception would have caused the banks harm or loss, while the transactions in question actually profited the banks involved.
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