No Bluffing: OIJ raids online poker offices; FBI after fugitives in Costa Rica
In 2007, a small private plane had a minor accident during takeoff at Costa Rica’s Juan Santamaría International Airport. While investigating the accident, airport officials stumbled upon something unusual.
Inside the plane authorities found a bag containing $3 million in cash. The plane was headed for Colombia, and one of its passengers was Scott Tom, owner of the online gambling website Absolute Poker. One of the world’s more popular online gambling sites, Absolute Poker was based at a non-descript office building in Rohrmoser, west of San José, under the name Innovative Data Solutions (IDS).
The multi-million dollar discovery prompted the Public Prosecutor’s Office to begin monitoring Tom, who investigators suspected of laundering money earned from U.S. poker players and dispersing it into bank accounts throughout the world.
“When we learned of the money on the plane and that Scott Tom had been on the flight, we began to investigate the financial and economic activities that he had in Costa Rica,” Guillermo Hernández, adjunct prosecutor at the Prosecutor’s Office’s Financial Crimes Division, told The Tico Times this week. “We were able to determine that there was an important flow of money from the United States to Costa Rica and that it was being invested in different forms in Costa Rica.”
But Hernández said the Prosecutor’s Office couldn’t verify the money’s source.
Four years later, and with a little help from the U.S. Federal Bureau of Investigation (FBI), the Prosecutor’s Office began to build a case that allegedly linked the funds to illegal online gambling operations. Investigators believed they had enough evidence that money laundering and bank fraud were occurring.
In what Hernández referred to as the “green light” for Costa Rican officials to intervene, on April 15, Preet Bharara, U.S. Attorney for the Southern District of New York, and Janice Fedarcyk, assistant director-in-charge of the New York Field Office of the FBI, announced the indictment of 11 defendants, including the founders of Absolute Poker, PokerStars and Full Tilt Poker, the three largest online poker companies in the U.S. The indictment also ordered the closure of 75 bank accounts and the five Internet domain names associated with the websites.
Of the 11 men named in the indictment, four were presumed to be tied to or living in Costa Rica, including Tom, Brent Beckley, Bradley Franzen and Ira Rubin.
In response to the indictment, the Costa Rican Public Prosecutor’s Office called upon the Judicial Investigation Police (OIJ) to intervene. On May 6, OIJ officials raided the IDS building and the site of PokerStars, located in the Forum complex in Santa Ana, west of San José. The OIJ also searched Tom’s home in Escazú, and the home of the mother of former Escazú mayoral candidate Olman Rimola (see his personal website at: www.olmanrimolaalcalde.com).
Investigators suspected Rimola, owner of the IDS building, of assisting Tom with laundering money obtained from U.S. bets. Oldemar Ramírez, a security worker at the Forum complex, was also arrested. Ramírez is suspected of assisting the laundering of illegal funds.
According to Hernández, Rimola turned himself in to the Prosecutor’s Office on Monday. Both Ramírez and Rimola have been ordered to stay in the country and must present themselves to the Public Prosecutor’s Office every 15 days. Tom remains at large.
“We were able to determine that the money coming from the U.S. to Costa Rica was invested by two Costa Ricans [Ramírez and Rimola],” Hernández said. “The two men were investing the money in Costa Rica, especially in the purchase of property and vehicles.”
The Tico Times attempted to contact Rimola, but telephone numbers listed on his website were not answered or were disconnected. His attorney, José Alberto Monterrosa, told the daily La Nación that while online gambling may be illegal in the U.S., it is not a crime in Costa Rica.
“In our country, [online gambling sites] are permitted, so what is the crime? I still haven’t found one and I don’t think I’m going to,” Monterrosa told La Nación.
In the U.S. Attorney’s Office indictment, Bharara elaborated on the alleged schemes used by the operators of the gambling sites.
“As charged, 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,” Bharara said. “Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”
The U.S. online poker industry, which annually rakes in millions of dollars, was forever altered when the U.S. enacted the Unlawful Internet Gambling Enforcement Act (UIGEA) on Oct. 13, 2006. The UIGEA made it a federal crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.”
Unwilling to relinquish their billion-dollar sites, several online poker companies attempted to circumvent the new law and developed intricate methods to continue to allow U.S. based gamblers to play on their sites.
“Because U.S. banks and credit card issuers were largely unwilling to process their payments, the poker companies allegedly used fraudulent methods to circumvent federal law and trick these institutions into processing payments on their behalf,” Bharara said. “For example, defendants Isai Scheinberg and Paul Tate of PokerStars, Raymond Bitar and Nelson Burtnick of Full Tilt Poker, and Scott Tom and Brent Beckley of Absolute Poker, arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls. Of the billions of dollars in payment transactions that the poker companies tricked U.S. banks into processing, approximately one-third or more of the funds went directly to the poker companies as revenue through the ‘rake’ charged to players on almost every poker hand played online.”
On Wednesday, Bharara announced that the U.S. Attorney’s Office had reached an agreement with Absolute Poker that the company would reimburse funds owed to U.S. residents that gambled on the site. The U.S. Attorney’s Office estimated that the companies had collectively obtained approximately $3 billion in revenue.
“With this agreement, all three of the companies that allegedly engaged in the operation of illegal Internet gambling businesses, as well as massive wire fraud, bank fraud, and money laundering, are moving forward with the process of returning the funds they owe to their U.S. customers,” Bharara announced on Wednesday. “As with the other two companies we named in the complaint, Absolute Poker has at all times been free to reimburse any player’s deposited funds. This office expects the companies to return the money that U.S. players entrusted to them. And as today’s agreement continues to demonstrate, we will work with the poker companies to facilitate the return of funds to such players.”
Despite the agreement, the U.S. Attorney’s Office said it would not restore the domain name for Absolute Poker. As of Wednesday, the IDS building where Absolute Poker was housed in Rohrmoser remained closed and vacant.
According to Hernández, PokerStars continues to operate in Costa Rica and continues to service clients in non-U.S. markets such as Europe and Asia. Hernández said PokerStars employees evacuated the building for 3 to 4 hours during the morning of May 6, though they returned to work later that afternoon.
To date, only four of the 11 men included in the original April 15 indictment are in custody in the U.S.
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