PocketFivers who have been wondering why online poker checks have been bouncing received word on Tuesday that the U.S. Attorney’s Office for the Southern District of New York had authorized the seizure of over $30 million in funds allegedly used for “money laundering transactions and illegal gambling offenses,” according to an article released by the Associated Press. What happens next has not been determined. The Poker Players Alliance (PPA) noted that it is “working closely with legal counsel on this issue to determine the appropriate course of action and will keep members updated as events warrant.” The PPA added that players affected would be compensated fully by online poker sites.Around June 4th (last Thursday), a representative of the Southern District of New York called for the seizure of $19 million in player funds in banks located in Scottsdale, Arizona and Los Angeles, California. The former was Alliance Bank of Arizona and the targeted account belonged to Allied Systems. However, the PPA questioned whether due process as prescribed by the United States Constitution was violated: “The prosecutor acted and the banks responded without a warrant being issued.” Also last week, the Southern District of New York requested the seizure of $14 million from a Wells Fargo bank in San Francisco. In total, over $30 million is currently in limbo.
Rich TheEngineer Muny (pictured at left), the PPA’s State Director from Kentucky, told PocketFives.com, “So many players assumed the Federal Government couldn’t do anything about internet gambling. Congress passed a bill to target the financial services end of it and this should be a wake up call.” Arlo Devlin-Brown, the Assistant U.S. Attorney for the Southern District of New York, signed the letter sent to the bank in Arizona. According to the Associated Press, “In another letter faxed the same day, Devlin-Brown asks that the bank treat the funds ‘as legally seized’ by the FBI.” The New York Times claimed that checks issued by PokerStars and Full Tilt Poker are affected.The PPA explained that the Wire Act of 1961 and Illegal Gambling Business Act were allegedly violated. Not trampled on was the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed back in 2006. In a press release distributed by the PPA on Tuesday, the one million member strong organization commented, “The PPA is disappointed that this unprecedented action has been commenced against law abiding poker players… This money should be immediately released by the Southern District to ensure that player payouts are not further disrupted. To that end, the PPA is coordinating a legal strategy to appropriately protect members who are impacted.” The PPA also authored a letter to Devlin-Brown asking to become a part of the process in the future.
So what’s next? Anything from a lawsuit to an out of court settlement could be on the docket for the PPA and online poker players. Muny speculated, “I see this ending in a strong fight. The PPA has a solid record of winning state lawsuits. It's do or die on this one. If the sites lose, the settlement would be that they could no longer do business in the United States.” In a post on June 8th, PocketFiver MarlonMotors pasted a response received from PokerStars that read, “Following our previous communication, we regret to inform you that our check provider's bank account remains frozen, the funds are not accessible, and it's not known when the funds will be released. The provider's legal team and the Poker Players Association (PPA) are working on this matter.” PokerStars has repeatedly doled out a 10% bonus for the hassle.
The actions by the Southern District of New York have, to some, underscored the need for licensing and regulation of the internet gambling industry in the United States. Muny explained, “It shows that some people think the government will drift off. This should demonstrate that we have two choices: prohibition or licensing. In the U.S., there isn’t a history of unregulated gambling.” To that end, Congressman Barney Frank (D-MA, pictured at right) introduced the Internet Gambling Regulation, Consumer Protection, and Enforcement Act in May. The bill provides for a comprehensive regulatory framework for the internet gambling industry in the United States and has attracted 26 co-sponsors.In addition, Frank introduced HR 2266, the Reasonable Prudence in Regulation Act. The bill halts the regulations of the UIGEA from going into effect until December 1st, 2010. As it currently stands, the financial services industry must come into full compliance with the UIGEA by December 1st of this year. HR 2266 has attracted 13 co-sponsors. Neither bill has been scheduled for mark-up in Committee.
The PPA wrapped up its press release by calling for regulation of the industry to avoid a situation like the one unfolding in New York that is eerily similar to the Neteller fiasco in 2007: “For more than three years, the PPA has advocated for a clear U.S. policy, established through licensing and regulating skill games like peer-to-peer Internet poker. The PPA… will continue to pursue every legal course available to ensure that in this instance, poker players’ funds are not seized and their right to play online poker is protected.”
Catch Muny this week on the PocketFives.com Podcast sponsored by Carbon Poker. The show will be released on Thursday and is available on iTunes.
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