r iCu-L1,o$[9Jml1,#w') - Typepad · 2011-11-04 · Defendant GUS HANSEN ("Hansen") is, and at all relevant times hereto was, a citizen of the Kingdom of Denmark. 17. Defendant PATRIK

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Cyrus M. Sanai, SB#150387SANAIS433 North Camden DriveSuite 600Beverly Hills, Californiq 90210Telephone: (irO) 7 17 -9840cyrus@)sanalslaw.com

Counsel for Lary Kennedy and Greg Omotoy

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UNITED STATES DISTRICT COURT OF TT{E CENTRAL DISTRICT OF CALIFORNIA

LARY KENNEDY, an individual, and GREG ) Case No.:oMoroY'anindividuar r iC"u-L1",o$"[9Jml1,#w')Plaintiffs,

vs.

CHRIS FERGUSON, an individual;HOWARD LEDERER, an individual;RAYMOND BITA& an individual; PHILLPGORDON, an individual; ANDY BLOCH, anindividual; PHIL IVEY, an individual;,PERRY FRIEDMAN, an individual; JOHNruANDA, an individual; ERIK LINDGREN,an individual; ERIK SEIDEL, an individual;MCIIAEL MATUSOW, an individual;ALLEN CUNNINGHAIVI, an individual; GUSHANSEN, an individual; PATRIKANTOMUS, an individual; RAFE FURST, anindividual; TILTWARE LLC, a Californialimited liability company; POCKET KINGSLTD, an Irish limited company; KOLYMACORPORATION A. V . V., a Curacaocompany; POCKET KINGS CONSULTINGLTD., an lrish limited liability company;FILCO LTD., a limited company; VANTAGELTD., a limited company; RANSTON LTD., alimited company; MAIL MEDIA LTD., alimited company; OXALIC LTD., a limitedcompany; ORIMC LTD., a limited company;IAN IMRICH, an individual; COZENO'CONNO& a limited liability partnership;and DOES I through 10, inclusive,

(I) MONEY HAD AND RECEIVED(2) I.INruST ENRICHMENT(3) RELIEF UNDER CONSUMERS LEGALREMEDY ACT, CALIFORNIA CIVIL CODESECTION I75O;(4) FRAUD(5) RELIEF UNDER CALIFORNIABUSINESS A}ID PROFESSIONS CODESECTTON 17200 ET SEQ.(6) RELIEF UNDER THE RACKETEER.INFLUENCED CORRUPToRGANIZATIONS ACT (',RICO*), 18 U.S.C.$ le64 ET SEQ;(7) CONSTRUCTTVE TRUST

JURY DEMAND

CLASS ACTION UNDER FRCP 23, CAL.CTV. CODE SECTION I75O AND BUS. &PROF. CODE SECTION I72OO

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Defendants.

COMPLAINT

Case 2:11-cv-08591-MMM-AGR Document 1 Filed 10/17/11 Page 1 of 15 Page ID #:1

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Plaintiffs, Lary Kennedy and Greg Omotoy hereby allege as follows:

JURISDICTION

l. This Court has jurisdiction pursuant to 28 USC $1331. Venue is proper in this

distict and Division because the Plaintiffs and certain of the Defendants identified below are

residents of Los Angeles County.

TIIE PARTIES

2. Plaintifl LARY KENNEDY ("Kennedy"), is apoker player who resides in the

County of Los Angeles, State of California

3. Plaintifi GREG OMOTOY ("Omotoy"), resides in the County of Los Angeles,

State of Califomia.

4. Defendant CHRIS FERGUSON ("Ferguson") is, and at all relevant times hereto

was, an individual residing in the County of Los Angeles, State of California.

5. Defendant HOWARD LEDERER ("Lederer") is, and at all relevant times hereto

was, an individual residing in the County of Clarh State ofNevada Lederer was convicted of

illegal bookmaking, i.e. sports wagering.

6. Defendant RAYMOND BITAR (*Bitar") is, and at all relevant times hereto was,

an individual residing in the County of Los Angeles, State of California-

7. Defendant PHILLIP GORDON ("Gordon") is, and at all relevant times hereto was,

an individual residing in the County of County of Clark, State of Nevada.

8. Defendant ANDY BLOCH ("Bloch") is, and at all relevant times hereto was, an

individtral residing in the County of Clark, State of Nevada.

9. Defendant PHIL IVEY ("Ivey") is, and at all relevant times hereto was, an

individual residing in the County of Clarlq State of Nevada.

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COMPLAINT


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10. Defendant PERRY FRIEDMAN ("Friedman") is, and at all relevant times hereto

was, an individual residing in the County of Los Angeles, State of California.

I l. Defendant JOHN ruANDA ("Juanda") is, and at all relevant times hereto was, an

individual residing in the County of Los Angeles, State of California.

12. Defendant ERIK LINDGREN ("Lindgren") is, and at all relevant times hereto was,

an individual residing in the County of Clarh State of Nevada.

13. Defendant ERIK SEIDEL ("Seidel") is, and at all relevant times hereto was, an

individual residing in the County of Clark, State of Nevada.

14. Defendant MICHAEL MATUSOW (*Matusow") is, and at all relevant times

hereto was, an individual residing in the County of Clarlq State of Nevada.

15. Defendant ALLEN CUNNINGIIAM ("Cururingham") is, and at all relevant times

hereto w,rs, an individual residing in the County of Clark, State of Nevada.

16. Defendant GUS HANSEN ("Hansen") is, and at all relevant times hereto was, a

citizen of the Kingdom of Denmark.

17. Defendant PATRIK ANTONIUS ("Antonius") is, and at all relevant times hereto

was, a citizen of the Republic of Finland.

18. Defendant RAFE FURST ("Frust") is, and at all relevant times hereto was, an

individual residing in the County of Los Angeles.

19. Defendant IAN IMRICH ("Imrich") is, and at all relevant times hereto was, an

individual residing in the County of Los Angeles.

20. Defendant TILTWARE,LLC, aCalifornia limited liability company with an

address at 10866 Wilshire Blvd. 4fr Floor, Los Angeles, CA 90024 ("Tiltware").

21. POCKET KINGS LTD. ("Pocket Kings") is an Irish company based in the

Republic of Ireland. Defendants are informed and believe and therefore allege that the entire share

capital of this entrty is owned by Tilrware.

22. KOLYMA CORPORATION A. V. V. ("Kolyma") is a Curacao company based in

Curacao.

COMPLAINT


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23. POCKET KINGS CONSULTING LTD. ("PKC") is an Irish limited liability

company.

24. FILCO LTD., VANTAGE LTD, RANSTON LTD., OXALIC LTD., ORJMC

LTD., and MAIL MEDIA LTD. (the "Money Laundering Companies") are companies whose

address and jurisdiction of formation are unknown

25. COZEN O'CONNOR LLP ("Cozen") is a limited liability parfrrership with an

offrce in Los Angeles County.

COMMON ALLEGATIONS

26. Fergusorl Lederer, Bitar, Gordon, Bloc[ Ivey, Juanda, Furst and Friedman (the

"Founder Defendants") founded Tilt'ware in 2003, and together with Lindgren, Seidel, Matusow,

Cunningham, Hanserq and Antonious comprise the "Individual Defendanrc". Tiltware, Pocket

Kings, Kolym4 PKC and the Money Laundering Companies are owned and controlled by the

Individual Defendants and were involved in owning, operating, financing and promoting the on-

line poker site fulltiltpoker.com until April l5,20ll and operated other websites incorporating

the name "Full Tilt Poker" (such entities hereby being known as the "Fulltiltpoker.com Group').

Most of the entities do not operate under their own name, but from time to time adopt the name

"Full Tilt Poker"; these entities, which are Kolyma PKC and the Money Laundering Entities,

shall be referred to at the "Full Tilt Poker Entities". Defendants Tiltware and Pocket Kings, while

members of the Fulltiltpoker.com Group, are not Full Tilt Poker Entities, as these Defendants

operate under their own ruune. Each of the Individual Defendants holds an interest in at least one

entity which is part of the Fulltiltpoker.com Group. The Individual Defendants and the

Fulltiltpoker.com Group comprise an association-in-fact (collectively, the "Full Tilt association-

in-fact") which was continuously offering on-line peer-to-peer poker to citizens of the United

States, 24 hours aMy, seven days a week from and after October l, 2005 or thereabouts until

April 15, 2011, when Bitar, Tiltware, Pocket Kings, Kolym4 PKC and the Money Laundering

Companies, among others, received word that a grand jury convened by the Unite States Attorney

for the Southern District of New York had indicted them and a forfeiture order for the

COMPLAINT


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fulltiltpoker.com URL and other assets had been granted. The Full Tilt Poker business offered to

non-United States citizens was shut down on June 29,2011 when the Alderney Gambling Control

Commission suspended the operations of the Defendants' websites due to their violation of

Alderney law and failure to return money to players. Imrich was integral in assisting the Founder

Defendants, representing from time to time FergusorU the Founder Defendants, Pocket Kings,

Tiltware and the Full Tilt Poker Entities in varying capacities as an attorney.

27. Peer-to-peer on-line poker is an Internet-based version of California cardrooms

such as the Bicycle Casino and the Commerce Casino (both located in Los Angeles County). At a

California cardroom players engage in poker and other card games against each other, and the

owner of the cardroom has no stake in the outcome, instead charging a fee to play each hand.

28. To play on firlltilpoker.net and parts of the fulltilpoker.com website, a person

signed up and is allotted a certain number of chips per day which have no value. The person

appeared to other players as a two-dimensional "avatar" selected from a pool of stock images, and

chooses a screen name. The player then played against other persons for such imaginary chips.

The business of www.fulltiltpoker.net was legal. To play on fulltilpoker.com, a person registered

for an account on the fulltiltpoker.com website. A person could play for free or for real money.

(The companion site, fulltiltpoker.net allowed only free play, i.e. with no actual money wagers.)

29. If a player chose to play for real money on www.fulltiltpoker.conr, the player sent

money to a bank account on-line payment system or credit card. The person appeared to other

players as a two-dimensional "ayatar" selected from a pool of stock images, and chooses a screen

n{rme. There is no ostensible "house" to play againsr Playing poker on a peer-to-peer basis

through the Internet is not illegal under federal law, or any state law other than the law of

Washington State. The operation of on-line cardrooms are not illegal in California and most other

American states provided that they do not profit from operation of the cardroorn, i.e. that the

provider of the on-line cardroom services do so for free. On-line cardrooms which profit from the

operation of the cardroom are not illegal in Califomia, so long as the operator of the cardroom

does not operate in any way as the "house" by having, directly or indirectly, a stake in the outcome

of the game. _5-

COMPLATNT


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30. Though the Full Tilt association-in-fact, including each of the Defendants,

represent and have represented that the www.fulltiltpoker.com business is not gambling and is a

cardroom, both statements are false. Poker is considered a form of gambling in all American

states that have addressed the issue in appellate case law, though some states, like California, treat

it differently from other kinds of gambling. The www.fulltiltpoker.com website was never a

cardroom in respect of real-money play because the house, that it is to say the owners and

operators of the www.fulltiltpoker.com website, regularly played on the website. The presence of

the "house" on www.fulltiltooker.com is manifested in at least two different ways. First, the

Individual Defendants and certain other professional poker players sponsored by the Defendants

will play on the site, utilizing the funds of the Fulltiltpoker.com Group as their stakes in the gzrme.

Several of the Individual Players, for example Antonius, use multiple screen ftlmes and accounts

on www.fulltiltpoker.com. The appearances of the Individual Defendants and the other

professionals are in some cases open to other players and in some cases not, however the fact that

they play with the Fulltiltpoker.com Group money was completely hidden to players. The

participation of the Individual Defendants in the game renders the play on fulltiltpoker.com illegal

under Cal. Civil Code $330, though no player could know this from the facts ascertainable to them

on the website.

31. A second means by which the Defendants took a position in the games which they

own and operate are through "robots'which are computer programs that play poker by interacting

with an on-line poker room in amanner similar to a human being. Ferguson and Bloch (graduates

of UCLA and MIT respectively) created poker robots to play on the www.fulltiltpoker.com and

www.fulltiltpoker.net websites. The purpose of the robots were twofold: frst and most important

they filled out virtual poker tables which were nearly empty; second, the poker robots play a very

consistent girme and can beat unskilled or moderately skilled players, increasing the site's

revenues.

32. On-line poker players hate robots, because they play a boring, conservative and

error-free game. On-line players avoid those poker sites which allow or tolerate their customers to

play via robots, and many consider it a form of cheating.

COMPLAINT


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33. The use of poker robots on www.fulltiltpoker.com and www.fulltilpoker.net

created a customer relations problem, because players would complain about other account

holders they suspected were robots or whose card play was dictated by robot programs. The

Defendants therefore created a"zprotolerance" policy toward robots and robot-assisted players

that were reported by its cr.rstomers. Of course, most of the robots reported were the

Fulltiltpoker.com Group's own, but the player accounts for the Fulltiltpoker.com Group's own

robots could simply be shut down and a new one assigned to Fulltiltpoker.com Group's robots in a

minute. In additioru certain players who repeatedly lost to a skilled player would start on-line

jihads against the successful player, accusing that player of being a robot. The Defendants

discovered over time that cancellation of real player accounts accused of being a o'robot" was

another profit center, as the player account money of the wrongly-accused player was confiscated.

While a portion of that money was handed out as bounties, thus incentivizrng such false

accusations, the Defendants kept a significant proportion.

34. Lederer and Bitar are ostensibly the head of Tiltware, and Ferguson, though

playing no legal role, described himself as the "chairman" of Tiltware. Lederer, Bitar, Furst and

Ferguson operate as the de facto "board of directors" of Tiltware and the other corporate

defendants. Of the Founder Defendants, all but Lederer and Ivey have computer technology

experience and all of them but Bitar and Furst are professional or semi-professional poker players.

Of the Founder Defendants, all but Bitar and Furst were held out to be part of "Team Full Tilt" or

"Full Tilt Pros" who act as spokespersons and representatives of the business.

35. At some time after 2003 but prior to October 1,2005, Defendants Lindgren, Seidel,

Matusow, Cunningham, Hansen and Antonius acquired interests, directly or through dummy

corporations, in Tilt'ware and other entities comprising the Full Tilt Poker Entities and began

exercising common control thereof with the Founder Defendants. The Defendants by their

admission regularly cause the Full Tilt Poker Entities to reforur, reorganize and reassign rights and

obligations to ensure that no outside person can, without legal discovery tools or the wiretapping

and investigative powers of the federal governmen! determine the identities of the Full Tilt Poker

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COMPLAINT


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Entities. Each of the Individual Defendants has held and continues an ownership interest in

Tiltware and through exercise of their votes in the entities comprising the Fulltiltpoker.com Group

directed and conholled the operation of www.fulltiltpoker.com. Each of the Fulltiltpoker.com

Group employed and continues to employ at least five people from the date of the creation of the

entrty, and each such entity has been in existence for at least two years.

36. The Defendants deliberately obscured the actual legal entities which comprise the

Full Tilt Poker Entities at any time. The roles and responsibilities of the individuals and corporate

entities comprising the Full Tilt Poker Entities shift over time, as it is a fluid and sophisticated

conspiracy. Based on the information available to Plaintiffs from their own investigation and the

indictment, between October 1,2005 and April l5,20ll the following persoru; and entities played

or have played the following roles in the Full Tilt association-in-fact.

37. Each of the Individual Defendants owns, directly or indirectly, an ownership

interest in each of the corporate Defendants and other entities. Each has a vote in deciding what

the conspiracy does and how it operates, and the Individual Defendants delegate day-to-day legal

control of the entities conducting the conspiracy to Bitar, Furst, Ferguson, and Lederer. Without

limiting the forgoing, Friedman wrote and supervised the writing of a significant portion of the

software which runs the www.fulltiltpoker.com and www.fulltiltpoker.net websites. Bitar

supervises the legal and money-laundering transfer arrangements described below. Bloch,

Ferguson, Lederer, Gordon,Ivey, Juanda, Lindgren, Seidel, Matusow, Cunningham, Hansen and

Antonius promote the site and attract players, as well as playing directly on the website; for

example, Ferguson and lvey's faces were on the website, and each has made commercials

feanring them which could be played on the website during that time period. Furst was in charge

of managing the financial arrangementsamong the various corporate defendants.

38. The company which currently purports to supply software services to the

fulltiltpoker.com website is defendant Pocket Kings. It employed from its formation to the present

date at least five persorui continually, and as of April 15,20ll claimed to employ over 600

persons. Bitar is the controlling director of Pocket Kings.

COMPLAINT


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39. Tiltware acts as the nominal paying agent for funds distributed by the

Fulltiltpoker.com Group to the Individual Defendants. Each Individual Defendants is amember of

Tiltrrare. Bitar and Lederer are managers of Tiltrrare.

40. Beginning in or about 2001, credit card companies Visa and MasterCard introduced

regulations requiring member banks that processed credit card fiansactions for merchants (so-

called "acquiring banks") to apply a particular transaction code to internet gambling tansactions.

Thereafter, certain U.S. banks that issued credit cards to U.S. consumers (so-called "Issuing

Banks") elected not to extend credit to customers for internet gambling purposes and as a matter of

policy automatically declined tansactions bearing that internet gambling transaction code. The

number of U.S. issuing banks declining such transactions increased significantly over time such

that even prior to the passage of the Unlawfrrl lnternet Gambling Enforcement Act in October

2006, most United States banks blocked transactions containing the internet gambling code.

41. In order to circumvent the Visa and MasterCard regulations and trick U.S. banks

into authorizing their internet gambling transactions, Bitar, Lederer, and Fergusorl worked with

and directed others to apply incorrect transaction codes to the internet gambling transactions in

order to disguise the nature of those tansactions and create the false appearance that the

transactions were completely unrelated to internet garnbling.

42. One method used by the members of the conspiracy to trick the United States

banks into approving internet gambling charges involved the creation of phony non-gambling

companies that the Poker Companies used to initiate the credit card charges. At various times

Bitar (at the direction of the other Individual Defendants and on behalf of the Fulltiltpoker.com

Group ), created or helped create, with the assistance of third parties, fictitious companies -

including phony online flower shops and pet supply stores that established Visa and MasteCard

merchant processing accounts with offshore banks. When the Fulltiltpoker.com Group processed a

transaction through one of these phony companies without applying a gambling code to the

transaction, the United States issuing bank would be tricked into approving the gambling

transaction even if its policy was to not allow the extension of credit for internet gambling.

Because the credit card networks were often ablelo detect the fraudulent nature of these phony

COMPLAINT


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merchants after a period of time and to shut down processing for those phony merchants, Bitar

arranged for a supply of stand-by phony merchants to be used when a particular phony merchant

was discovered.

43. A second method used by the FuIl Tilt association-in-fact to trick United States

banks involved the use of certain pre-paid credit cards. At various times from January 1,2007 to

April 15, 2011, Bitar and the Money Laundering Companies developed so-called "stored value

cards" -such as pre-paid debit cards or even pre-paid "phone" cards - that could be "loaded" with

funds from a U.S. customer's credit card without using a gambling tansaction code. Once

"loaded" in this way, the stored value cards were rsed by gamblers almost exclusively 1s aansfer

funds to the Fulltiltpoker.com Group. To avoid detection, Bitar, with the assistance of third party

consultants working with the Fulltiltpoker.com Group and other intemet gambling sites, aranged

for fake intemet web sites and phony consiumer "reviews" of the stored value cards so that it

would appear that the stored value cards had some other legitimate purpose.

44. Because Visa and Maste(ard sought to identiff and block attempts to circumvent

their rules requiring intemet gambling transactions to be correctly identified -so that banks could

decline to accept them if they wishe{ the Fulltiltpoker.com Group was unable to process credit

card transactions consistently, even through its use of fraudulent means. Accordingly Bitar worked

with and directed others to develop yet another method of deceiving United States banks and

financial institutions into processing the Fulltiltpoker.com Group's internet gambling Eansactions,

through fraudulent e-check processing. At all times relevant to this Complaint the Automated

Clearinghouse (or *ACH") system was an electronic network, administered by the Federal

Reserve, that allowed for electronic fund transfers to and from United States bank accounts

through "e-checks" or "electronic checks." At various times relevant to this Complain! the

Fulltiltpoker.com Group increasingly focused the payment systems on e-checks. A principal

difficulty for the Fulltiltpoker.com Group in e-check processing was that the ACH system required

the merchant to open a processing account at a United States.based Originating Depository

Financial Institution (or "ODFI"). Because the Fulltiltpoker.com Group was violating the laws of

most if not all of the states in which it offered .lip" poker, the Fulltiltpoker.com Group could

COMPLAINT


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not and did not seek to open bank accounts for e-check processing in the names of their

businesses. Instead, the Fulltiltpoker.com Group found third parties willing to open the bank

accounts and process these e-check tansactions on behalf of them using the names of phony

companies.

45. [n furtherance of this aspect of the scheme, the Fulltilpoker.com Group relied on

various middlemerq including Ryan Lang ("Lang") and Bradley Franzen ("Franzen"), to connect

the Fulltiltpoker.com Group with payment processors willing to handle internet poker e-check

transactions. Lang and Franzen were also indicted by the grand jury in the Southern District of

New York for, inter alia, bank frau4 wire fraud, and money laundering, and Franzen has pled

guilty. Following these introductions, Bitar, Ferguson and Lederer caused various of Kolyma and

the Money Laundering Companies to enter into processing agreements with certain of the e-check

processors. The agreements provided the e-check processors with fees for processing each e-check

transaction that were substantially higher than fees paid for standard e-check processing for

legitimate, non-gambling merchants. The Fulltiltpoker.com Group then worked with the e-check

processors and other co-conspirators to disguise the receipt of gambling payments so that the

transactions would falsely appear to United States banks as non-girmbling transactions. The

Fulltiltpoker.com Group, along with the e-check prtocessors, typically accomplished fraudulent e-

check processing as follows:

a. First, the e-check processors-sometimes directly, and sometimes through third

parties -opened bank accounts at United States-based ODFI banks in order to process the

Fulltiltpoker.com Group, e-check tansactions through the ACH system. The e-check processors

typically lied to the ODFI bank about the purpose of the accoun! falsely claiming that the account

would be used to process e-checks for a wide variety of lawful e-commerce merchants without

disclosing that, in fact, they would be used to process internet garnbling transactions. In some

cases, the e-check processors offered specific lies about the identity of these purported e-

commerce merchants. In several cases, for example, the e-check processors falsely told the banks

that the transactions were for particular purported internet shopping sites, such as an online store

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selling watches, when, in reality, as the e-check processors well knew, the transactions were for

the Fulltiltpoker.com Group.

b. Secon4 the e-check processors worked with the Fulltiltpoker.com Group and

others in the creation of dozens of phony corporations and corresponding websites so that the

money debited from U.S. customer's banks would falsely appear to United States banks to be

consumer payments to non-gambling related businesses. For exarnple, in or about June 2009, the

Fulltiltpoker.com Group arranged for two third parties to process payments for

theFulltiltpoker.com Group disguised as payments to a medical billing company, until accounts

related to that processing were seized by judicial order in or about September 2009. [n another

example, in or arotrnd June 2009, Franzen, working with multiple co-conspirators, created a phony

business called "Green2Yourcreen" to be used to disguise payments from U.S. gamblers destined

for the Fulltiltpoker.com Group. Franzen's co-conspirators told multiple United States banks

insured by the FDIC, including Citibank and Wells Fargo Bank, irmong others, that

"Green2YourGreen" was a "direct sales" business that allowed consumers to buy environmentally

friendly household products and sell them to other consumers in retum for commissions. Indeed,

the phony Green2YourGreen website that Frarzen's co-conspirators created to disguise the

gambling transactions listed numerousi products that were purportedly for sale and contained

"testimonials" about the benefits of green living. Franzen has pled guilty to these crimes which

were committed in conspiracy with the Fulltiltpoker.com Group.

c. When a U.S. gambler entered his or her checking account information on the

fulltiltpoker.com website the e-check transaction was submitted through the, ACH system using

the name of one of the phony businesses rather than the ftlme of the relevant entities and the

charge appeared on the customer's bank account under this phony rutme. The e-check processors's

computer systems communicated with the computer systems of the FulltiltPoker.com Group so

that when a gambler entered e-check information on the respective websites, the gambler and

website operator received notice of the name of the phony merchant that would appear on the

customer's bank account statement in lieu of the rulme of Full Tilt Poker as having initiated the

charge. _n-

COMPLAINT


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d. Similarly, members of the Full Tilt Poker association-in-fact worked with the

fraudulent processors to coordinate responses to customer inquiries to the phony merchants,

including the complaints of gamblers confused by the phony merchant rurme appearing on their

checking account statement.

46. Bitar and other members of the Futl Tilt association-in-fact worked with multiple e-

check processors introduced to them by Lang Franzen, and others. These e-check providers

included the following:

a. In or around the spring of 2007, Lang introduced Bitar and Kolyma to a method of

e-check processing offered by Intabill, an AusEalia-based payment processing company. Because

Intabill did not have direct urccess to United States ACH processing accounts, Intabill

subcontracted its processing to United States based e-check processors. With the knowledge and

approval of the Bitar, Ferguson and Lederer,Intabill disguised the gambling transactions as the

transactions of dozens of phony financial services merchants. Intabill processed at least two

hundred million dollars of transactions for Kolyma and others from mid-2007 through March

2009. In or around March 2009, Kolyma ceased processing through Intabill, in part because

Intabill owed Kolyma forty million dollars or more for processed firnds that Intabill kept.

Kolyma sued Intabill and others for these funds in Australian courts.

b. In 2008 and 2009 Chad Elie ("Elie") had worked with Intabill to establish

processing accounts for internet gambling that were disguised as accounts set up to process

repayments of so-called "payday loans" which were high-interest high-risk loans unrelated to

gambling transactions. In or about August and September 2009, working with Franzen, Elie

processed transactions on behalf of the Fulltiltpoker.com Group.

c. [n or around December 2008, after learning that Intabill was unlikely to continue

processing, Bitar, Ferguson and Lederer began to cause the Fulltiltpoker.com Group to process

payments through an Arizona payment processor (the "Arizona Processor"), which was assisted at

times by a company operated by Lang. From in or about December 2008 through on or about June

1,2009, the Arizona Processor processed more than $30 million in payments primarily from U.S.

gamblers to the Fulltiltpoker.com Group; all of transactions were processed using the names of

COMPLAINT


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phony merchants so as falsely to appear unrelated to internet gambling. On or about June l, 2009,

the Arizona Processor ceased processing transactions following the seizure of its bank accounts by

U.S. law enforcement pursuant to a judicial warant.

d. At various times relevant to this Complaint the Fulltiltpoker.com Group employed

Ira Rubin (*Rubin"), his company E-Triton and various of Rubin's associates including an e-check

processor in California (the "California Processor") to process their intemet gambling transactions

disguised as legitimate online merchant tansactions order to trick U.S. banks into authorizing

transactions. In or about June 2009, following the Arizona Processor's termination of its

processing activities, Franzen and an employee of the Fulltiltpoker.com Group arranged for two of

Rubin's associates to process payments for the Fulltiltpoker.com Group disguised as payments to

a medical billing company until accounts related to that processing were seized by judicial order in

or about September 2009.

47. In or around late 2009, following the collapse of multiple e-check processing

operations used by the Fulltiltpoker.com Group and the judicially ordered seizure of funds, Bitar,

Ferguson and Lederer begin exploring a new payment processing strategy called "Transparent

Processing" (so named because it would be invisible to law enforcement) and sought to find, at

least where possible, processing solutions that would not attract the attention of law enforcement.

48. The Fulltiltpoker.com Group had difficulty in identiffing "transparent" processors.

Elie and his associates were, however, able to persuade the principals of certain small, local

United States banks that were facing financial diffrculties to engage in such processing. [n

exchange for this agreement to process gambling transactions, the banks received sizeable fee

income from processing poker transactions as well as promises of multi-million dollar investrnents

in the banks from Elie and his associates. In at least one case, a payment to a bank official who

approved the processing was made as well.

49. For example, in or around September 2009, Elie, together with Thornhill and a

partner of Elie's, Jeremy Johnsoq approached John Campos, the Vice Chairman of the Board and

part-owner of SunFirst Banlq a small, private bank based in Saint George, Utah- Campos, while

expressing "trepidations" about gambling pto".:il:g, proposed in a September 23,2009 e-mail to

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accept such processing in return for a $10 million invesfinent in SunFirst by Elie and Johnson,

which would give Elie and Johnson more than 30% ownership of the bank. Elie and Johnson made

an initiat investnent in SunFirst Bank of approximately $3.4 million in approximately December

2009. On or aboutNovember 29,2}0g,Thornhill told an associate "things are going well with the

bank we purchased in Utah and my colleagues and I are looking to purchase another bank for the

purposo of repeating our business plan. We probably could do this for a grand total of 3 or 4

banks.'

50. On or about December 14,2009, SunFirst Bank began processing payments for the

Fulltiltpoker.com Group. On or about April 8, 2010, Carnpos, the defendant, sent an "invoice" to

Elie's Partrrer requesting that $20,000 be paid to a corporate entity that Campos controlled as a

"bonus" for "Check and Credit Card Processing Conzulting." SunFirst Bank processed over $100

million of payments for the Fulltiltpoker.com Group through November 9,2010, when, at the

direction of the FDIC, it ceased third party payment processing. SunFirst Bank earned

approximately $1.6 million in fees for this processing.

51. During the entire period of operation, the Fulltilpoker.com Group transferred funds

received from players to pay expenses, to the Individual Defendants, to Imriclr, and others. When

players sought to cash ou! in some cases the requests were honored, and in other cases the

accounts were arbitrarily confiscated. Rather than holding player funds in reserve or in separate

accormts, the Defendants distributed money from players they permitted to cash out using the

fresh deposits from other players. The total disributed to the Individual Defendants was in excess

of $400 million dollars. Imrich knew that the moneys he received were from player fi,rnds, as he

was intimately involved in the business operations of the Fulltiltpoker.com Group.

52. Each of the Individual Defendants knows and understands the legal stmcture of the

Fulltiltpoker.com Group. The legal structure of the network of corporate entities that effectuated

the money-laundering transactions were created by lmrictr" Plaintiffs are informed and believe

and on that basis allege that all Defendants knowingly and willfully conspired to conduct the

actions alleged herein. Each Defendant did the acts and things herein alleged ptrsuant to, and in

furtherance of, the conspiracy, or lent aid and enco-uragemen! to the conspiracy.

COMPLATNT


Documents

r iCu-L1,o$[9Jml1,#w') - Typepad · 2011-11-04 · Defendant GUS HANSEN ("Hansen") is, and at all relevant times hereto was, a citizen of the Kingdom of Denmark. 17. Defendant PATRIK