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Poker News | Gambling and the Law

NY Court Freezes More Than $30 Million in Online Poker Payments

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The story began with rumors and suspicions and quickly traveled to news reports from the likes of the Associated Press and other major mainstream news outlets. It started with incidents of players describing bounced checks from online poker sites like PokerStars and Full Tilt Poker, but facts quickly surfaced to make it a much bigger story than any poker forum poster could have anticipated. The Southern District of New York’s assistant United States attorney ordered three banks to freeze more than $30 million in funds in the process of transfer from players to online poker accounts and vice versa.

The assistant U.S. attorney, Arlo Devlin-Brown, requested the seizure from a judge in the Southern District of New York who issued the warrant for a San Francisco branch of Wells Fargo. The Alliance Bank of Arizona was also instructed to freeze the bank account of Allied Systems, Inc. “because they constitute property involved in money laundering transactions and illegal gambling offenses,” and the order was carried out despite no warrant being presented. Three banks were affected in total, including Goldwater, and reports indicate that more than $30 million is being held in frozen accounts indefinitely on the basis that they are payments to or from offshore internet gambling companies that Devlin-Brown has deemed illegal.

As soon as this information was confirmed, the Poker Players Alliance rose to the challenge and immediately sent a letter to the Devlin-Brown asking to be informed of any future hearings and allowed the opportunity for standing in them. The PPA executive director, John Pappas, wrote on behalf of the 1.2 million-plus members of the non-profit poker organization and under the advisement of legal counsel:

“Because there are no exigent circumstances in this case to justify the ex parte seizure of PPA members’ property, we request notice and the opportunity to be heard with respect to any warrant the AUSA may seek to seize the now-frozen accounts held by Citibank, Goldwater and Alliance. The PPA will pursue every legal course available to ensure that poker players’ funds are not seized and their right to play online poker is protected.”

At the same time, PPA Chairman Alfonse D’Amato, former U.S. Senator from New York, penned a statement in response to the legally questionable actions of the court. It read, in full:

“The PPA is disappointed that this unprecedented action has been commenced against law abiding poker players.  The payment processor funds frozen by the Southern District of New York belong to individual poker players – not operators of poker websites – and do not represent the proceeds of any gambling activity, much less illegal gambling activity.  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 PPA members who are impacted by the Southern District’s actions.  Further, the PPA has contacted the affected poker websites and has been informed that deposit and payout issues of players are being addressed and will be fully satisfied."

“There are many legal issues that question the merit of the Southern District’s actions.  Of greatest concern is that, in at least two cases, these actions were taken without first obtaining a seizure warrant.  Seizure of money without judicial authority and litigation tactics inconsistent with previously stated Department of Justice policy appear to be the type of conduct that the Department has recently committed to change.  Accordingly, the PPA on June 8th wrote to the prosecutor in charge of the matter and raised appropriate challenges and constitutional concerns with the actions taken to date.

“We are also concerned that the Southern District has selectively taken action against online poker when the current law regarding the activity is far from clear, and policies from various levels of government are inconsistent at best. In fact, no federal or state court has ever found a payment processor or a player accessing an Internet poker site to have violated the federal laws alleged by the Southern District in this case.

“For more than three years the PPA has advocated for a clear US policy, established through licensing and regulating skill games like peer-to-peer Internet poker.  The PPA remains committed to legislation that creates a clear regulatory framework and we 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.”

The sites affected by the seizures, which include PokerStars, Full Tilt Poker, and others who accept U.S. customers, have yet to release statements regarding the issue. However, PokerStars, as one example, has contacted customers whose checks bounced or transfers were unsuccessful to let them know that they will be informed as to when a new account is established. At that time, they can request a check or wire transfer again. In the meantime, players are said to have been awarded a bonus to their online poker accounts for the inconvenience.

It has been reported by some news outlets that two subpoenas were issued to unknown online poker company representatives with instructions to appear in a New York courtroom on June 18. Confirmation could not be obtained at the time of this article submission, but more information on this subject continues to be discovered as the severity of the issue is realized.

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