Feds used decoy payment center to snag online gaming firms

Federal officials unsealed two indictments Monday and said they had seized 11 bank accounts and 10 Internet domain names, including the well-known doylesroom.com poker site that was run from Costa Rica.

In addition two men from British Columbia were named in one indictment and a woman in Costa Rica, Ann Marie Puig, 35, was named in the second indictment. Ms. Puig is believed to be the owner of K23 Group Financial Services, doing business as BMX Entertainment. In addition to doylesroom.com, the firm operates bookmaker.com, 2betdsi.com, funtimebingo.com, goldenarchescasino.com, betmaker.com, betgrandesports.com and betehorse.com, according to an accompanying affidavit, which added that the firm also operated truepoker.com under the name of TPCR Limited. All these domain names were seized.

Federal officials revealed that they had set up a payment processing center in Baltimore, Maryland, called Linwood Payment Solutions and ran it for two years to collect inside information on the gambling operations. The processing center was real and handled about $33 million during the time it was in operation, federal officials said.

The two Canadian men were identified as Darren Wright; and David Parchomchuk. They ran ThrillX Systems, Ltd., which did online gambling business as BetEd.com. BetEd.com is a sportsbook and casino and the flagship of ThrillX Systems, the accompanying affidavit said, adding that corporate offices are in San José. ThrillX is a software solutions provider using the most recent technology, and the betting operation is associated with Sabana Investments & Trade S.A. ThrillX has a bank account in Panamá as does Sabana, the federal affidavit said.

The BetEd.com site also was seized.

The 11 bank accounts that were seized are in Charlotte, North Carolina, Guam, Panama, Malta, Portugal; and The Netherlands, according to the indictments.

The indictments and seizures were announced by Rod J. Rosenstein, U. S. attorney for the District of Maryland, and other federal and state law enforcement officials.

In a related case, Bradley Franzen, a payment processor who was detained in an earlier wave of indictments, pleaded guilty in New York to conspiracy and money laundering charges. He maintains a home in Costa Rica. He was arrested when federal officials acted against Absolute Poker and other online poker firms last month.

The U.S. attorney’s office gave this outline:

The indictments allege that the defendants own and manage illegal gambling businesses involving online sports betting.
The affidavit alleges that online gambling sites are run by companies located outside of the U.S., while the majority of customers are in the U.S. Internet gambling operators rely upon the U.S. banking system, and more specifically, money-processing business generally called payment processors, to facilitate the movement of funds to and from their customers, the gamblers.

Typically, an internet gambling operator directs the payment processor to collect funds from individual gamblers which are used to wager with the gambling organization. Those gambling proceeds are transferred to an offshore foreign bank. The internet gambling operator then sends a check or wire transfer from an offshore bank to the payment processor, directing the payment processor to distribute the money to gamblers for their winnings.

The affidavit filed in support of the seizure warrants alleges that Homeland Security Investigations in Baltimore opened an undercover payment processor business, called Linwood Payment Solutions. Linwood allowed undercover agents to gain person-to-person contact with top managers of gambling organizations to discuss the Internet gambling business, to negotiate contracts and terms of the processing, and to handle the intricate movement and processing of collection and payment data from the gambling organizations to the banks.

The affidavit alleges that on Nov. 12, 2009, a Maryland-based online gambler and cooperating informant confirmed that he/she frequented gambling sites, opened accounts and gambled in Maryland. The gambler agreed to set up online gambling accounts and was provided $500 to place bets on gambling Web sites. The gambler created an account on a BetEd Web site and placed several bets. On March 30, 2010, BetEd used Linwood to wire transfer $100 to the gambler’s bank account. This is how Maryland state law enforcement officials became involved in the case.

Linwood allegedly processed gambling transactions since 2009 for BetEd, K23 and other gambling organizations using banks located in Guam and Charlotte, North Carolina. According to the affidavit, between December 2009 and January 2011, Linwood processed over 300,000 transactions worth more than $33 million, including transactions for individuals in Maryland. Between February 2010 and March 2011 alone, BetEd directed Linwood to wire transfer over $2.5 million of collected gambling proceeds to bank accounts in Panama; and between February 2011 and April 2011, K23 directed Linwood to wire transfer over $91,000 of gambling proceeds to bank accounts in Portugal and Malta.

The affidavit was filed by M. Lisa Ward, special agent for Homeland Security. She noted that some of the money was transferred to meet payroll and other necessary expenses. The U.S. anti-gambling sweeps are taking their toll on jobs for young, bilingual Costa Ricans.

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