Web king behind FBI raids
Source: The Courier-Mail
A FORMER Queensland internet king is believed to have been a key figure behind FBI action against three major gambling websites in the United States.
Daniel Tzvetkoff, who had been facing 75 years jail in the US, has done a deal with prosecutors which has seen him freed on bail and living in a secret New York location.
The Courier-Mail reported today that the deal came after Tzvetkoff - a Brisbane boy wonder, who started a company with school mates at 13 - became embroiled in a massive, $543 million stew of money laundering, bank fraud and conspiracy that could bring down the world of online gambling.
Federal prosecutors in New York yesterday charged the founders of the three largest internet poker companies in the US with bank fraud, money laundering and other gambling offenses and are seeking penalties upward of $3 billion.
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Federal authorities also froze approximately 76 bank accounts in 14 countries that contain proceeds from the alleged offenses. They also shut down five internet domain names used by the three companies to host their games.
A total of 11 defendants, including the founders of Poker Stars, Full Tilt Poker and Absolute Poker, were named in the indictment unsealed Friday.
The Courier-Mail reported today that two of those companies Full Tilt Poker and PokerStars, had been seeking $100m they believed Tzvetkoff had taken from them.
Tzvetkoff was arrested in April last year and charged with money laundering, bank fraud and conspiracy for processing $543m in illegal internet gambling earnings through his British Virgin Islands corporation, Intabill, the trading arm of his now liquidated Brisbane company, BT Projects.
He was mysteriously bailed last August, and US authorities are using his inside knowledge of the gambling industry to go after gaming companies.
In yesterday's indictment, federal prosecutors explain that poker companies operating offshore cannot accept most forms of payment "in connection with the participation of another person in unlawful internet gambling." Since most banks in the US would not process their payments, the companies circumvented federal law by making payments appear to be transactions for other types of merchandise.
In the indictment, federal prosecutors say they arranged for payment processors with bank accounts in the US to receive payments from US gamblers and disguise them as payments for products such as jewelry or golf balls.
Of the billions of dollars in payment transactions that the Poker Companies tricked US banks into processing, approximately one-third or more of the funds went directly to the Poker Companies as revenue through a charge players must make on almost every poker hand played online.
That scheme worked for a while until some banks caught on. By 2009, they had shut down many fraudulent bank accounts used by the poker companies. Two of the defendants later came up with a scheme to persuade the principals of a few small, struggling banks to process payments in return for multi-million investments.
In one case, they persuaded the vice chairman of SunFirst Bank in Saint George, Utah, to process gambling transactions in return for a $10 million investment.
"As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some US banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits," said Preet Bharara, US Attorney in Manhattan.
"Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud."
