Folding over fraud?

By Mike Wendling

Some of the world's most popular online poker sites face criminal charges in America

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US authorities have unveiled an indictment against the owners of three of the world's biggest poker websites, throwing the young industry into turmoil.

Criminal and civil charges filed in New York have forced online poker sites PokerStars (based in the Isle of Man) and Full Tilt Poker (based in Alderney, in the Channel Islands), as well as Canada-based Absolute Poker, to stop doing business with Americans.

It is the latest upheaval for the industry, which over the last decade has grown from nothing into one that rakes in an estimated $5bn (£3.25bn) each year and is regulated in vastly different ways in countries around the world.

America is the biggest market, with up to a million online players. Gambling laws vary from state to state, but in 2006, the US federal government attempted to put the brakes on online poker with the Unlawful Internet Gambling Enforcement Act (UIGEA).

The UIGEA was meant to halt money transfers to online gaming sites, and several big poker sites, wary of running foul of the law, pulled out of the American market. However the three companies named in the indictment continued to welcome US-based customers.

Federal prosecutors in New York are seeking at least $3bn (£1.8bn) in civil money laundering penalties. If convicted, the 11 men named in the indictment face possible prison time and huge fines.

As a result of this latest scandal, the share prices of competing poker sites, which have already turned down business from US players, have experienced a significant jump.

Prosecutors accuse the companies and alleged co-conspirators of concocting dozens of fake corporations - purportedly selling items such as clothing, golf clubs and pet food - to collect money from US players.

“These defendants concocted an elaborate criminal fraud scheme...to assure the continued flow of billions in illegal gambling profits”

Preet Bharara Manhattan US attorney

After American financial institutions got wise to the trick, the indictment alleges, the companies decided to change strategy.

Prosecutors say they managed to persuade several small local banks that were facing financial difficulties to process poker-related transactions, by promising fees and fresh investment cash.

In one case, the indictment says, PokerStars and Full Tilt Poker took a 30% stake in a Utah bank, SunFirst, and used it to process $200m (£123m) in poker funds.

"These defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits," Manhattan US attorney Preet Bharara said in a statement.

"Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud."

A court order seized poker company funds in 76 bank accounts in 14 countries. The companies also had their .com domain names seized - the usual images of chips, cards and superstar poker players replaced by blunt legal statements and the FBI logo.

Aaron Todd, a senior editor for industry news site Casino City Times, said the poker companies were caught off-guard by the indictment despite years of openly challenging the US law.

Poker fans have dubbed the FBI's action "Black Friday" for the industry

"If you're a big player in an industry as big as poker, with laws in place designed to stop what you're doing, it's not that surprising that the authorities are going after you," Mr Todd said.

He says that estimates suggest a large proportion of players on the British sites actually come from the US - perhaps up to half of all players on the Alderney-based Full Tilt poker site.

Mr Todd says the indictments will hit the incomes of big-name American players who reap endorsement money on top of their poker winnings, but also lesser-known "grinders" - low stakes players who squeeze out smaller profits over time.

"At this point, a lot of players have lost two main places they play.

"There are some sites that are still open for US play, but people will be wary of playing on those sites, as they too could close to American players or face similar legal action."

Last year, 5 live Investigates reported on a ring of Chinese poker players who colluded to rip off players on the Isle of Man-based PokerStars site. PokerStars refunded $2.1m (£1.3m) to customers across the world after the scam was uncovered.

That case was not an isolated one. The company had previously refunded $80,000 (£52,000) to players who unwittingly played against poker "bots" - automatic card-playing software programmes.

And in 2007 Absolute Poker refunded $1.6m (£985,000) after it was alleged that a company insider cheated customers.

However, this latest indictment, unsealed last week, could cost the companies far more than cheating scandals ever did.

“This is a huge deal and it has absolutely shifted the landscape of online poker forever.”

Aaron Todd Casino City Times

PokerStars and Full Tilt Poker blocked US customers after the FBI's action on what poker players are calling "Black Friday" on blogs and in online forums.

However, players elsewhere in the world have continued to use the online card rooms after the company websites were moved to .eu domains, outside the reach of American authorities.

An e-mail sent to PokerStars players said: "It is business as usual for all players outside the USA …you can rest assured that player balances are safe."

In a statement released after the indictments were unsealed, Full Tilt said it was "saddened" by the charges.

The company added: "Full Tilt Poker believe online poker is legal and has always has been committed to preserving the integrity of the game and abiding by the law."

Absolute Poker did not respond to the BBC's inquiries.

Aaron Todd of Casino City Times says the indictments could potentially lead to more political pressure to relax online gambling laws in America.

"This is a huge deal and it has absolutely shifted the landscape of online poker forever."

Listen to 5 live Investigates on BBC Radio 5 live on Sundays from 2100 BST. You can also listen via the BBC iPlayer or download the 5 live Investigates podcast.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13121768

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Fighter O'Sullivan keen for more

Ronnie O’Sullivan says he can win more world titles after his first-round victory over Dominic Dale but will quit if he stops enjoying snooker again.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Source: http://news.bbc.co.uk/go/rss/int/news/-/sport1/hi/snooker/13137748.stm

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Owen bemused by Newcastle booing

Manchester United striker Michael Owen says he is disappointed after being booed by Newcastle fans during Tuesday's 0-0 draw at St James' Park.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

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Quake damage hits Japan exports

The north-east of Japan, where major manufacturers have factories has seen major damage

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Japanese exports fell by more than expected in March, as damage from last month's earthquake and tsunami affected shipments.

Exports declined 2.2% from a year earlier, the Finance Ministry said. Many analysts were expecting a drop of about 1.5%.

One of the main factors was car exports which tumbled 28% from a year earlier.

The earthquake and tsunami on 11 March has damaged factories and disrupted the supply chain.

Shipments of semiconductor products also fell by 6.9%.

It is the first decline in overall exports in 16 months.

For Japan's two major export destinations, shipments to the US declined 3.4% from the previous year, while shipments to China rose an annual 3.8%.

Major Japanese manufacturers have been forced to suspend production due to shortages of parts.

Sony and Toyota are among companies which say they are facing supply chain problems.

To add to their worries, power supply shortages are expected in the summer months.

"Due to power supply constraints expected in the summer, a full pick up in exports is unlikely until at least the end of this year," said Yuichi Kodama from Meiji Yasuda Life Insurance.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13138965

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Suspicious story

Diana Garbutt had told her husband about an "intimate encounter", the jury was told

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For nearly seven years, Melsonby post office and shop - and the couple who ran it - were central to the village.

Robin and Diana Garbutt had moved to the quiet community from York in 2003 to take over the business.

Mrs Garbutt trained as a postmistress but it was her husband who ran the branch, working long hours and building close relationships with customers.

But tragedy struck in March 2010 when Diana Garbutt was killed in the upstairs living area of the premises.

In a 999 call, Robin Garbutt said his wife had been attacked and begged for assistance and advice about what to do.

When ambulance crews arrived they found Mrs Garbutt lying dead in her bed having suffered three blows to her head.

Her 45-year-old husband told police Mrs Garbutt had been killed by an armed robber.

He said the robber forced him to open the safe some time after 0830 GMT and then he went upstairs and found his wife had been attacked.

The village was catapulted into the media spotlight as police started a hunt for her killer.

Robin Garbutt in interview with North Yorkshire Police

Underwater search teams scoured the area and villagers' bin collections were suspended as evidence was sought.

Speaking at the time, Det Supt Lewis Raw, senior investigating officer, said: "The tragic death of Diana Garbutt has had a significant impact on people living in Melsonby and Richmondshire as a whole.

"It has also captured the concern and sympathy of the wider community due to the high level of media coverage of this case."

At a news conference Mrs Garbutt's mother, Agnes Gaylor, appealed for help, stating that the killer had destroyed her life as well as her daughter's.

She described Mrs Garbutt as an "amazing girl" with a "wicked sense of humour", adding: "She was content, she loved her life. She didn't deserve to be taken like this."

Three weeks later, on 14 April, the police investigation took a turn closer to home with the arrest of Garbutt. Two days later he was charged with murder.

Flaws were found in Garbutt's version of events.

Could everything that he described really have taken place in the space of two minutes, from 0835 GMT when the safe was opened to 0837 GMT, when he made his 999 call?

No-one in the village reported seeing anything suspicious take place on the morning of the alleged armed robbery.

The pathologist also found Mrs Garbutt must have died much earlier than her husband had claimed.

The police investigation found that far from being a happily-married, financially-secure couple, the Garbutts were in a mess.

They were deeply in debt and probably living off post office money.

During the trial, Teesside Crown Court was told Mrs Garbutt had been unfaithful and up until the night she died she had been logging on to an internet dating site.

It was this pressure, tension and ill feeling, said the prosecution, that caused Garbutt to erupt in extreme violence and kill his wife, hitting her over the head with a metal rod.

A jury accepted this version of events and found Garbutt guilty of murder.

Now the future of the post office remains uncertain and the murder of Mrs Garbutt not forgotten by villagers.

Melsonby resident Neil Jones said: "A lot of villagers have been upset by it... I knew Robin and it's a difficult one because it's something that's just so alien.

"You don't expect anything like that happening on your doorstep."

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Source: http://www.bbc.co.uk/go/rss/int/news/-/news/uk-england-york-north-yorkshire-13095106

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US ex-bank head guilty of fraud

Six of Farkas's co-conspirators testified against him

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The former head of a company that was once one of the largest US mortgage lenders has been convicted of fraud.

Lee Farkas, ex-chairman of Taylor, Bean and Whitaker, was found guilty on all 14 counts he faced.

The company's 2009 collapse caused the loss of 2,000 jobs and the failure of Colonial Bank, the sixth-biggest bank failure in US history.

Prosecutors said Colonial and two other banks were cheated out of $2.9bn (£1.78bn).

Farkas was convicted by a federal jury in Virginia of bank fraud, wire fraud, securities fraud and other counts.

"His shockingly brazen scheme poured fuel on the fire of the financial crisis," said Assistant Attorney General Lanny Breuer, of the justice department's criminal division.

Farkas, who testified in his own defence at the 10-day trial, insisted he had done nothing wrong.

Prosecutors said Farkas and other individuals who had already pleaded guilty in the conspiracy defrauded Colonial Bank's mortgage division of more than $1.4bn by arranging for the bank to purchase worthless mortgage loans from Taylor, Bean and Whitaker, including loans already sold to other investors, and what prosecutors described as fake pools of loans.

In addition, they misappropriated $1.5bn from Ocala Funding, in part by defrauding major banks to which they sold worthless promissory notes.

They used the money to cover cash shortfalls at Taylor, Bean and Whitaker, prosecutors said.

Farkas and his co-conspirators also sought to defraud the US government's Tarp programme, created in autumn 2008 to purchase loan assets from banks to help them strengthen their balance sheets, prosecutors said.

However, no Tarp money was received by Taylor, Bean and Whitaker, the court heard, and investigators from that office ultimately helped to uncover the fraud.

Farkas's lawyer, Bruce Rogow, said he was disappointed by the verdict and planned to appeal. He is due to be sentenced on 1 July.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Source: http://www.bbc.co.uk/go/rss/int/news/-/news/world-us-canada-13139151

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VIDEO: Health IT: a tricky operation

Governments have spent - and in some cases wasted - billions of dollars trying drag hospitals into the Internet era. But perhaps hospitals are better left to their own devices.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Source: http://www.bbc.co.uk/go/rss/int/news/-/news/business-13118568

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