Just hours after the news on Thursday that Senator Robert Menendez (D-NJ) had introduced legislation to legalize games of skill like online poker, the industry learned that Douglas Rennick had been indicted on charges associated with internet gambling and online poker payment processing. The Canadian was charged with bank fraud, money laundering, and illegal gambling. Rennick faces up to 55 years and prison and $1.75 million in fines for his infractions. According to the U.S. Department of Justice, Rennick was “in control of” several payment processors including My ATM Online, Alenis Limited, KJB Financial Corporation, Check Payment Financial, and Account Services.Officials for the Southern District of New York and Federal Bureau of Investigation (FBI) made the announcement on Thursday. Over $350 million was transferred from a bank in Cyprus to several banks in the United States in order to process payments related to online poker, blackjack, slots, and a variety of casino games. The indictment notes, “Rennick and his co-conspirators provided false and misleading information to various United States banks about, among other things, the nature of the internet gambling-related payments being processed by the companies under Rennick’s control.”
In August of 2007, Rennick opened up an account under the name KJB Financial Corporation at a Washington Mutual branch in California. He told bank officials that the account would be used for affiliate checks, rebates, refunds, sponsorship revenue, and minor payroll. In February of this year, Rennick opened an account at a Union Bank branch in California under the name Account Services. The indictment states that Rennick portrayed Account Services as a company that was a “rebate check processor for large retailers and auto dealerships.”
The FBI and Southern District of New York began tracking Rennick in February of 2007 and are seeking at least $565,000, which the indictment claims is the “amount of proceeds obtained as a result of the bank fraud conspiracy offense.” The Government also called for funds held in Wells Fargo and Union Bank branches under the name Account Services. PocketFivers will recall that Account Services filed a motion in the Southern District of California for the return of $14 million that it claims was unlawfully seized by the Government in June. The future of that case is now up in the air.
The bank fraud charge carries a penalty of up to 30 years behind bars and a $1 million fine. The money laundering charge carries a penalty of up to 20 years in prison and a $500,000 fine. Finally, the illegal gambling charge has a penalty of up to five years in jail and a $250,000 fine. U.S. District Judge Sidney Stein will handle the case.
Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan told PocketFives.com, “This is concerning if you’re an online gambler or operator. Even if you try to operate within the boundaries that the law provides, you may be put at risk by people in the middle of the supply chain who may or may not be engaged in illegal activities.” On how Thursday’s news will affect a case by Costigan Media, the parent company of Gambling911, to open the warrants and affidavits associated with the online poker seizure, Brennan commented, “We’re trying to find that out today. A judge is supposed to rule this week. It’s hard to tell if that’s what caused the Department of Justice to act, but no one has released any information yet.”
Seizures that occurred in June temporarily affected paper checks and e-checks from several of the world’s largest online poker sites. Account Services was among those processors whose funds were seized. The Southern District Court of California is scheduled to hear its case on August 21st. In addition, the Poker Players Alliance (PPA) has filed an amicus brief in support of Account Services. The 1.2 million member strong organization’s document will focus on why poker is a game of skill. PPA Executive Director John Pappas noted that Thursday’s developments “do not affect our brief.”Stay tuned to PocketFives.com for the latest on the indictment of Douglas Rennick.
