On Aug. 5, 2009, Lev L. Dassin, Acting Attorney for the U.S. District Court, Southern District of New York, and Joseph M. Demarest Jr., the Assistant Director-in-Charge of the FBI, filed an indictment charging 34-year-old Canadian Dennis Rennick with bank fraud, money laundering and conspiracy to operate an illegal gambling business. The charges stem from Rennick's role in processing more than $350 million for Internet gambling companies.
The investigation found that beginning in 2007, Rennick opened a number of bank accounts in the United States under various corporate names. Rennick and alleged co-conspirators sent transaction proceeds from a Cyprus bank account to various U.S. bank accounts.
Rennick is accused of stating the U.S. accounts would be used for issuing rebate, refund, sponsorship, affiliate and payroll checks and for processing those transactions when, instead, said accounts were used to receive funds from offshore Internet gambling companies that offered poker, blackjack, slots and other casino games. He then disbursed funds via checks to U.S. residents seeking to cash out their gambling winnings.
In June 2009, federal prosecutors seized about $33 million from Account Services Corp., one of the companies that Rennick allegedly used to pay online gambling customers. "It almost seems like this guy was more of a middle man to get the money back into the U.S., but I never heard of the guy and neither has anyone in the payments industry," said Gun Barrel City, Texas-based payments attorney Jay Reeve.
"Of course Fed banks today have to deal with the Patriot Act and KYC [know your customer] requirements, but it doesn't take that much work or that much genius to set up accounts on fraudulent representation."
With the exception of fantasy sports, online lotteries and horse or harness racing, the transfer of funds from a financial institution to an Internet gambling site is prohibited in the United States under the Unlawful Internet Gambling Enforcement Act of 2006. And Reeve doesn't expect this law to be revised anytime soon because of the stigma associated with Internet gambling.
"I don't know of any respectable acquirer that even wants to get near Internet gambling," Reeve said. "Of course everyone would like to have the money that it generates, but I think the big players look at if from the standpoint that a) they don't want the media writing about them getting all this Fed money and then making additional billions in gambling transactions; and b) they fear a greater loss of revenue in the soiling of their brand being affiliated with that kind of activity."
If convicted, Rennick faces up to 55 years in prison, $1.75 million in fines and the forfeiture of approximately $565.9 million, which according to the FBI, are the proceeds Rennick obtained through illegally processing online gambling transactions and conspiring to defraud financial institutions.
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