Payment Processor for Online Poker Companies Pleads Guilty to Laundering Internet Poker Funds

Preet Bharara, the United States Attorney for the Southern District of New York, announced that IRA RUBIN, a payment processor for the Internet gambling industry, pled guilty today to money laundering, bank and wire fraud, and gambling offenses in connection with a scheme to deceive U.S. banks into processing hundreds of millions of dollars in online poker transactions. Specifically, he helped process payments for three of the largest Internet poker companies—Pokerstars, Full Tilt Poker, and Absolute Poker—by disguising transactions so that they would appear to be on behalf of non-gambling merchants selling clothing, jewelry, sports equipment and other items. RUBIN, a United States citizen who had been residing in Costa Rica since 2008, was detained in Guatemala on April 26, 2011, and then transferred to the United States. He pled guilty today before U.S. Magistrate Judge Gabriel W. Gorenstein.

According to the superseding indictment unsealed on April 15, 2011, other documents previously filed in the case, and statements made in court:

In late 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), which made it a crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” After several Internet gambling businesses withdrew from the U.S. market following the passage of UIGEA, Pokerstars, Full Tilt Poker, and Absolute Poker became the top three Internet poker operators continuing to do business in the United States. Because U.S. banks were largely unwilling to process Internet gambling payments, companies turned to third party payment processors, including RUBIN, who were willing to disguise the payments so they would appear to be unrelated to Internet gambling.

For example, in mid-2008, RUBIN, together with co-conspirators, created dozens of phony e-commerce websites purporting to sell everything from clothing and jewelry to golf clubs and bicycles. In reality, these sites were used to disguise Pokerstars’ online poker transactions. Between 2008 and March 2011, Absolute Poker also used RUBIN at various times to process echecks disguised as, among other things, payroll processing, affiliate marketing, and online electronics merchants.

RUBIN committed the charged offenses while in Costa Rica where he has been living since 2008.

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RUBIN, 53, pled guilty to one count of conspiracy to violate the unlawful Internet Gambling Enforcement Act, one count of conspiracy to commit bank and wire fraud, and one count of money laundering conspiracy. He faces a maximum sentence of 55 years in prison. He is scheduled to be sentenced by U.S. District Judge Lewis A. Kaplan on May 17, 2012 at 4:00 p.m.

Four other defendants charged with RUBIN have appeared in the United States: Bradley Franzen, Brent Beckley, Chad Elie, and John Campos. Franzen pled guilty on May 23, 2011, and Beckley pled guilty on December 20, 2011. Elie and Campos are scheduled to go to trial before Judge Kaplan on April 9, 2012. They are presumed innocent unless and until proven guilty. The remaining six defendants charged in the Superseding Indictment are at large.

Mr. Bharara thanked the FBI for its outstanding work in the investigation, which he noted is ongoing. Mr. Bharara also thanked Immigration and Customs Enforcement’s Homeland Security Investigations New York and New Jersey offices for their continued assistance in the investigation. Finally, Mr. Bharara thanked the U.S. Department of State Diplomatic Security Service for their assistance identifying RUBIN in Guatemala and facilitating his return to the United States.

This matter being handled by the Office’s Complex Frauds and Asset Forfeiture Units. Assistant U.S. Attorneys Arlo Devlin-Brown, Niketh Velamoor, and Nicole Friedlander are in charge of the criminal case, and Assistant U.S. Attorneys Sharon Cohen Levin, Jason Cowley, and Michael Lockard are in charge of related civil money laundering and forfeiture actions.