April 21, 2010 (CAP Newswire) – One of the reasons that pro-online gambling legislators such as Barney Frank and Jim McDermott give for legalizing online gambling is safety to online players. And that claim has been highlighted in recent days with the arrest of online casino payment processing entrepreneur bigshot Daniel Tzvetkoff.
The arrest made big news throughout the mainstream media. That may be a good thing; although, at first glance, the arrest may seem to tarnish online gambling’s reputation, on closer inspection, it actually serves to highlight the problems with the UIGEA. By not taking a hand in regulating online gambling, the U.S. government is leaving the door wide open to schemes like the one that Tzvetkoff now stands accused of.
In little over a year, Tzvetkoff, an Australian, allegedly laundered well over $500 million through various online gambling operators. Apparently, those operators hadn’t received the promised returns on their investments through Tzvetkoff, so, when he showed up at a U.S. conference last week, several of those operators contacted the FBI, who promptly arrested the 27-year-old entrepreneur.
“Daniel went to the US and got into the country no problems but I think him wandering around that conference sort of thumbing his nose at some of the people he owed large amounts of cash to caused them to get in touch with the FBI,” a former workmate said, according to Victoria’s Herald-Sun.
“The US Attorney’s Office alleged Mr Tzvetkoff helped online gambling companies launder about $US540 million ($584 million) into offshore accounts,” the article continues. “He is charged with money laundering, money laundering conspiracy, gambling conspiracy and bank fraud conspiracy and faces 75 years in a US prison if convicted.”
“In an case unsealed in New York, prosecutors accused Daniel Tzvetkoff, 27, of processing gambling proceeds and making them appear legal to banks, starting in early 2008,” confirms Reuters. “He created dozens of so-called shell companies in a scheme that he once wrote was ‘perfect,’ prosecutors said.”
“Prosecutors say Tzvetkoff also invested approximately $27 million from these ACH transactions into an online ‘payday loan’ company that offered consumers high-interest, short term loans that typically carried an annualized interest rate of more than 500 percent,” adds Australia’s North Country Times.
According to the Australian Broadcasting Company, Tzvetkoff’s Nevada-based lawyer says ” he’s pleading not guilty. He’s innocent until proven guilty … At this time, I have not seen any of the government’s proof.”
However, Yampolsky admitted “it could be a tough fight when they make their bail application in Judge Peggy A. Leen’s court, with US prosecutors so far refusing to entertain the prospect of agreeing to support Tzvetkoff’s release on bail,” the Sydney Morning Herald later reported.
Whether or not Tzvetkoff is ultimately found guilty (and at this point, with both the government and the online gambling operators he allegedly defrauded teaming up against him, the cards seems stacked pretty well against him), the most salient result is the highlighting of the haphazard payment situation prevalent in the online gambling financial world. Because the UIGEA is forcing operators to find alternative means to process payments, the door is wide open to shucksters like Tzvetkoff who can easily exploit the non-regulated environment.
All this is making for a more uncertain online gambling world, which can be more easily exploited by opportunists of Tzvetkoff’s nature. So, instead of raking in billions of dollars on regulated online gambling, the U.S. government is choosing to enable a new industry of corrupt Internet casino money laundering — and likely spending millions policing this new crime in the process.