Sting Operation Behind Poker and Bingo Site Closures

The closure of many online gaming sites has players across the US scrambling for new places to play. In April the Department of Justice dealt a near fatal blow to the online poker industry in the US. The actions were not spontaneous but were well planned and were the result of an extensive and sophisticated sting operation. A two year sting operation set up by the Department of Homeland Securities Investigation created a fake online payment processor to process transactions for online poker sites, internet bingo sites, online sports books and online casinos.

On Monday, May 20, 2011, indictments were unsealed and were followed by domain seizures and the seizure of bank accounts associated with poker, internet bingo sites. The HIS even seized the domain of poker legend Doyle Brunson who was a pioneer in the online poker and casino industry. The sting operation was a direct result of information provided by an informant known only as CI-5 who began cooperating with US authorities in 2009. Many in the industry are speculating that the informant was Australian computer whiz kid Daniel Tzvetkoff who became an informant to avoid a 75 year jail sentence in the United States. Tzvetkoff faced charges in the US for money laundering, bank fraud and other illegal activities. Prosecutors say that Tzvetkoff was responsible for processing $500 million dollars in transactions between American players and online gaming sites.

The affidavit filed by the affiant Special Agent M. Lisa Ward before United States Magistrate Judge Beth P. Gesner of U.S. District Court for District of Maryland outlines the sting operation and investigation. HIS agents set up a fictitious online payment processor known as Linwood Payment Solutions. The fake company was located close to Atlantic City, New Jersey and the entire operation was run by a team of undercover agents. The agents contacted a number of online gaming companies and offered their services to facilitate deposits and withdrawals for American players. The agents set up a website paymentprocessingsolutions.com and had in person meetings with managers of foreign based online gambling firms.

Between December 2009 and January 2011, Linwood processed 300,000 transactions worth $33 million dollars for American players at poker, online bingo and casino sites. According to the affidavit several meetings took place during the two years the fake processor was in business. The agents contend that the purpose of the meetings was to develop strategies designed to circumvent US online gaming regulations. In addition to the closure of four poker sites one internet bingo network has closed because of pressure from US authorities. For now the future of online gaming in the US is uncertain at best.