Online Poker Funds Seizure Warrants Redacted, Unsealed

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This week, Judge Laura Swain sided with Costigan Media, the parent company of Gambling911.com, in a landmark ruling. As a result, redacted warrant applications have been released in the seizure of over $30 million belonging to more than 24,000 online poker players. The freezing of funds by the Southern District of New York back in June temporarily sent payouts from online poker sites into a tailspin, although rooms compensated players for bounced checks and, in some cases, even provided a cash bonus. Now, you can chalk up another victory for the online poker world, as the warrant applications have been released to the world.

Interactive Media Entertainment and Gaming Association(iMEGA) Chairman Joe Brennan told PocketFives.com what the significance of this week’s ruling by Judge Swain is: “You have new media being granted the same right of access as traditional media. Whether it’s Gambling911 or the New York Times, as far as that court is concerned, they all have the same First Amendment right of access.” In addition, the U.S. Department of Justice may have additional watchdogs over its actions in the future. Brennan explained, “You now have the Department of Justice put on notice that if they go out and do this again, they're going to be challenged. Whether it's industry-focused media or associations like iMEGA and the Poker Players Alliance (PPA), other entities can push back on the Government.”
The warrants in question were sworn to by FBI Special Agent Dana Conte in June and affected funds held in Union Bank and Wells Fargo branches in California under the name Account Services. You’ll recall that Douglas Rennick, an individual associated with Account Services, was indicted last week for bank fraud, money laundering, and illegal gambling. He’s a Canadian resident and faces up to 55 years behind bars. Prior to his indictment, Account Services filed a motion for return of property, namely $14 million seized by the Southern District of New York. A hearing is scheduled to occur on August 21st in the matter.

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Brennan commented, “Before this ruling, you had the Department of Justice operating uncontested. The only people who were going to contest its actions were the targets of criminal investigations. You now have outside parties involved.” Gambling911 informed Judge Swain on August 6th that the Department of Justice had indicted Rennick. On how the news affected its case, a letter sent to Judge Swain notes, “We bring the indictment to your attention because it suggests that there is no longer a need on the part of the Government to keep the seizure warrant documents sealed… While some courts deny a right of access pre-indictment, all courts agree that there is some right of access post-indictment.”

In the warrant application, Conte notes that she is an FBI Special Agent investigating financial crimes. She believed that the money held in the name of Account Services represented funds derived from money laundering and illegal gambling. FBI agents had been following “illegal internet gambling businesses” for three years that offered real money online poker, casino games, and sports betting to players from the United States.

One section that covers six of the Wells Fargo warrant application’s 13 pages (“The Defendant Account is Used to Transmit Gambling Payout Checks”) is redacted, or crossed out. Brennan told PocketFives.com that the names of those being investigated or supporting the investigation were likely included in the deletions. In the Union Bank warrant application, headings with substantial information redacted include “Account Services’ History of Providing Payment Services for Online Gambling Companies” and “The Defendant Accounts were Used to Provide Payment Services for Online Gambling Companies.” The Union Bank document is 15 pages long; about six are redacted.

The U.S. Government is directed to report to the court within 120 days on its investigations. However, just a few hours after the warrant applications were unsealed and released, Judge Swain issued a letter to the Government asking it to explain how the indictment of Rennick affected “the law enforcement interests that the Government has asserted in opposition to Costigan’s motions to unseal the warrant application affidavits.” The information was due at Noon ET on Wednesday, about 24 hours after the letter was issued.

Stay tuned for the latest right here on PocketFives.com.

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