FEDS CLAIM BUSTED GAMBLERS WERE MONEY LAUNDERING
Over $100 million in transactions processed in illegal sports betting operation
The Deseret News reports that federal prosecutors are claiming seven busted Las Vegas residents were involved in an elaborate money-laundering service for illegal Internet gambling sites, which at one point was processing more than $100 million in transactions.
During an evidentiary hearing in federal court this week, federal prosecutors gave a glimpse of an automated cash laundering system that ran parts of its operation in Draper, Utah and in the UK, Korea and Antigua. Prosecutors allege that the system would allow online gambling sites to process credit card transactions without reporting to credit card companies and banks that the transaction was for gambling purposes.
Federal agents gave evidence that U.S.-based gambling patrons would place bets on illegal gambling websites that offered gambling games and sports event betting. The bets were then forwarded to servers managed by Baron Lombardo, Count Lombardo and Richard Cason-Selman.
Gateway Technologies and Hill Financial Services Inc. out of Draper would then process credit card transactions, reporting the transactions as something other than bets. The laundered funds would then be sent back to Web sites.
The accuseds were busted in a major enforcement action in May of last year (see previous InfoPowa reports)
"This process was entirely automated," said assistant U.S. attorney Loren Washburn, who said the system was run on custom software and complex accounting software.
The operation catered to more than 40 online gambling sites and also did transactions for an online pharmacy, which sold prescription drugs, as well as several adult sites.
IRS agent Jamie Hipwell testified that the investigation uncovered several e-mails in which group members wanted to find a bank that would be willing not to process its transactions with the betting transactions code. Hipwell said the group settled with a Korean bank, which later was fined by Mastercard and Visa for violating transaction policies.
The e-mails also showed group members wondering if they should move their operation overseas to London, England.
Washburn said in addition to the credit card operation, the group also ran a second, more manual system in which gambling wins from websites were wired via Western Union to a contact in the Philippines.
The group was charged with counts involving racketeering, bank fraud, wire fraud and money laundering.
Defence attorneys contend that some of the seven had nothing to do with the credit card side of the operation but rather were focused on the Western Union operation. They are seeking to have charges dropped against their clients.
Attorneys for the group also say much of the government's witness testimony comes from former employees from the Draper offices who were disgruntled and went to the authorities as 'whistle blowers'.
U.S. District Judge Ted Stewart will weigh the government's evidence to determine if it is enough to support taking the defendants to trial, scheduled to begin May 10, 2009.