The federal government has frozen more than $30 million in payment processors accounts in an attempt to enforce UIGEA rules. This news was revealed yesterday to the Associated Press by an Advocacy group for online poker, the Poker Players Alliance. According to the Poker Players Alliance, three banks; Citibank, Goldwater Bank and Alliance Bank of Arizona, were instructed to freeze accounts by the US Attorney for the Southern Districe of New York, Arlo Devlin-Brown. Additionally, an account at Wells Fargo bank in San Francisco was the subject of a seizure warrant last week.
Accounts held by payment processor Allied Systems Inc. at Alliance Bank were also the subject of freezes. The bank received a fax from a federal prosecutor last week instructing them to freeze Allied Systems Inc. accounts as they constituted “property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Devlin-Brown. Another letter instructed the bank to treat the funds as “legally seized” by the FBI, as there was probable cause that the money represented gambling payments made by US residents, directed to offshore internet gaming companies. According to Devlin-Brown, the FBI doesn’t need a warrant to seize proceeds of “specified unlawful activity”.. “under exigent circumstances”. Allied Systems Inc. is now being subpoenaed for its communications, financial transactions, processing services, corporate records and bank account details relating to its interactions with internet gaming businesses.
Even though, according to the UIGEA laws, what the FBI is doing is by the book, ie; looking to penalise the payment processing facilitators of any illegal online gaming activity, it should not be penalising the gamblers themselves by freezing their winnings, according to John Pappas, the executive Director of the Poker Players Alliance. He wrote to Devlin-Brown stating that “seizure of Allied Systems’ bank accounts would constitute a violation of due process because there are no exigent circumstances to justify deprivation of PPA members’ property without prior notice and a hearing.”… “The PPA will pursue every legal course available to ensure that poker players’ funds are not seized and their right to play poker online is protected.”
The Poker Players Alliance chairman, former New York Republican Sen. Alfonse D’Amato, backs up Pappas stance by maintaining that the the frozen funds are not the poker websites property and that they belong to the individual poker players.
The two sides of the argument here are essentially the following;
The FBI are maintaining that since online gaming is illegal in the US, according to the UIGEA 2006 ban, the funds from any such activities are subject to siezures.
The Poker Players Alliance on the other hand, maintains that online gaming per se, is not illegal for US residents. The UIGEA law targets financial institutions and prohibits them from accepting payments from credit cards, checks or electronic fund transfers to settle online wagers. The money held in the accounts of such institutions as Allied Systems Inc. is not theirs, it is the property of the (alleged) gambler. According to UIGEA, yes, Allied Systems Inc. are prosecutable, but the funds that they are holding (on behalf of alleged gamblers) are not their property and should therefore not be subject to seizure. Because of the way that UIGEA was written, only criminalizing the “middle man” in the online gaming process (the payment processor, but not criminalizing the supplier nor the gambler) the US residing gambler is not actually performing a criminal act (in so far as they cannot be taken to court for their actions) by participating in online gaming. Therefore, the FBI has no right to seize nor freize their assets, which are being temporarily held by such companies as Allied Systems Inc.
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This entry was written by admin on Wednesday, June 10th, 2009 at 9:50 pm and is filed under News.
